Performance Review

Results of Operations

Overview

We are a leading global provider of Sample to Insight solutions to transform biological materials into valuable molecular insights. QIAGEN sample technologies isolate and process DNA, RNA and proteins from any biological sample, such as blood or tissue. Assay technologies make these biomolecules visible and ready for analysis, such as identifying the DNA of a virus or a mutation of a gene. Digital insights integrate software and cloud-based resources to interpret increasing volumes of biological data and report relevant, actionable insights. Our automation solutions tie these together in seamless and cost-effective molecular testing workflows.

We sell our products - consumables, automated instrumentation systems using those technologies, and digital insights to analyze and interpret the data - to two major customer classes:

• Molecular Diagnostics - healthcare providers engaged in many aspects of patient care requiring accurate diagnosis and insights to guide treatment decisions in oncology, infectious diseases and immune monitoring. Includes Precision Medicine and companion diagnostics.
• Life Sciences - customers including government, biotechnology companies and researchers who utilize molecular testing and technologies who are generally served by public funding including areas such as medicine and clinical development efforts, forensics and exploring the secrets of life. Includes Pharma, Academia and Applied Testing customers.

We market products in more than 130 countries, mainly through subsidiaries in markets we believe have the greatest sales potential in Europe, Asia, the Americas and Australia. We also work with specialized independent distributors and importers. As of December 31, 2019, we employed approximately 5,100 people in more than 35 locations worldwide.

Recent Acquisitions

We have made a number of strategic acquisitions and implemented other strategic transactions aiming to achieve market-leading positions with innovative technologies in high-growth areas of molecular diagnostics and research. These transactions have enhanced our product offerings and technology platforms, as well as our geographic footprint. They include:

• In January 2019, QIAGEN began developing next-generation systems for digital PCR and acquired the digital PCR assets of Formulatrix, Inc., a developer of laboratory automation solutions. We expect to begin commercializing fully integrated digital PCR solutions in 2020, combining QIAGEN technologies and automation with the Formulatrix assets we acquired. Known as QIAcuity, the system will offer highly automated workflows, quicker time-to-result, and higher multiplexing and throughput flexibility than current digital PCR platforms. Digital PCR is one of the fastest-growing molecular testing applications in the life sciences industry. QIAGEN paid Formulatrix $125 million in cash upon closing and agreed to future milestone payments of approximately $136 million in 2020.
• Also in January 2019, QIAGEN acquired N-of-One, Inc., a pioneer in molecular oncology decision support services, to strengthen our bioinformatics leadership in clinical NGS interpretation. The acquisition broadened the QIAGEN Digital Insights offering of software, content and service-based solutions. N-of-One’s services and content have been integrated into QIAGEN Clinical Insights (QCI), adding medical interpretation and real-world evidence insights. The N-of-One somatic cancer database, drawing upon more than 125,000 anonymized patient samples, has increased QIAGEN’s lead as the provider of the industry’s largest genomics knowledge base.
• In September 2018, QIAGEN announced a strategic partnership with NeuMoDx Molecular, Inc. to commercialize next-generation, fully integrated automation systems for PCR testing. The NeuMoDx 288 (high-throughput version) and NeuMoDx 96 (mid-throughput) systems help clinical laboratories process increasing molecular test volumes and deliver more rapid diagnostic insights. QIAGEN is initially distributing NeuMoDx systems and consumables in Europe and other markets outside the United States. The companies entered a merger agreement whereby QIAGEN will acquire remaining NeuMoDx shares that it does not currently own at a price of approximately $234 million (QIAGEN currently owns 19.9% of NeuMoDx), subject to the achievement of regulatory and operational milestones, by mid-2020.
• In April 2018, QIAGEN acquired STAT-Dx, a privately held company, and launched QIAstat-Dx, a next-generation multiplex PCR system developed by STAT-Dx, in Europe. The novel QIAstat-Dx system enables fast, cost-effective and flexible syndromic testing from Sample to Insight. The first two CE-IVD marked assays provide differential diagnosis of serious respiratory and gastrointestinal infections. In May 2019, we received FDA clearance and launched QIAstat-Dx in the United States with the respiratory panel. A broad menu of tests is under development in infectious disease, oncology and other areas. QIAGEN acquired STAT-Dx for approximately $149 million in cash and additional future payments of up to about $44 million based on the achievement of regulatory and commercial milestones.

Our financial results include the impacts of recent acquisitions from their effective dates.

NGS portfolio orientation and measures to prioritize resource allocation

In October 2019, QIAGEN announced a new orientation for its NGS-related activities that focuses development activities on maximizing the new Illumina partnership for IVD solutions, as well as expanding QIAGEN’s offering of universal NGS consumables solutions for use with any sequencer. QIAGEN intends to continue supporting and servicing customers of the GeneReader NGS System, which is commercialized worldwide as a complete system for the processing of smaller targeted gene panels. However, QIAGEN discontinued development for new NGS instruments. Additionally, QIAGEN began implementing a set of initiatives to shift its Global Operations organization to a regional manufacturing structure and to expand the scope of activities at QIAGEN Business Services (QBS) centers in Wroclaw, Poland, and Manila, Philippines. QIAGEN currently anticipates further pre-tax charges of about $15-23 million in 2020 for these measures.

We determined that we operate as one business segment in accordance with ASC Topic 280, Segment Reporting. Our chief operating decision maker (CODM) makes decisions on business operations and resource allocation based on evaluations of the QIAGEN Group as a whole. Considering acquisitions made during 2019 together with recent changes in our management, we determined that we still operate as one business segment. We provide certain revenue information by customer class to allow better insight into our operations. This information is estimated using certain assumptions to allocate revenue among the customer classes.

Year Ended December 31, 2019, Compared to 2018

Net Sales

In 2019, net sales grew 2% to $1.53 billion compared to $1.50 billion in 2018 reflecting growth in consumables and related revenues which more than offset lower instrument revenues. Consumable and related revenues includes the contributions from our January 2019 acquisition of N-of-One, which provided net sales of approximately $5.0 million in 2019. We experienced increases across consumables and related revenues (+3% / 89% of sales) due to strong sales of the QuantiFERON-TB test as well as gains within the Life Sciences customer classes. This more than outweighed decreases across the instruments portfolio (-8% / 11% of sales) including lower sales of platforms for assay technologies and the GeneReader NGS Systems despite higher placements of the QIAcube Connect, QIASymphony and QIAstat-Dx systems. Net sales were negatively impacted by two percentage points from adverse currency movements against the U.S. dollar.

Customer classes: An overview of net sales by product category and customer class:

Molecular Diagnostics grew 1% and represented 48% of sales in 2019. Molecular Diagnostics sales were adversely affected by three percentage points of adverse currency movements compared to 2018. Sales in 2019 included gains in consumables, in particular for the QuantiFERON-TB test compared to 2018 that was partially offset by significantly lower revenues from companion diagnostic co-development projects and instruments.

During 2019, Life Sciences sales grew 2% and reflected 52% of sales, while currency movements adversely impacted this customer class by three percentage point compared to 2018. Increased demand in consumables and related revenues across this customer class more than offset weaker instrument sales, which were affected by the focus on a new generation of products being prepared for launch and led by the new version of QIAcube Connect. Results for 2019 also absorbed the adverse effect of the April 2018 divestment of the Applied Testing veterinary testing assay portfolio.

The Americas led the geographic regions with 4% sales growth in 2019 with continued improvements within Life Sciences and overall gains in the United States, Brazil and Mexico against a decline in Canada. The Asia-Pacific / Japan region in 2019 was flat due primarily to the weaker results in China and Japan against gains in India. The EMEA region experienced a 1% decline due in part to declines in France and Italy against improving trends in Germany, Turkey and the United Kingdom.

Gross Profit

Gross profit was $1.01 billion, or 66% of net sales, in 2019, compared with $1.00 billion, or 67% of net sales, in 2018. Generally, our consumables and related products have a higher gross margin than our instrumentation products and service arrangements. Fluctuations in the sales levels of these products and services can result in changes in gross margin between periods. The growth in consumables and related revenue during 2019 contributed favorably to the margin, which was negatively impacted by higher amortization expenses related to developed technology and patent and license rights that were acquired in business combinations or asset acquisitions. The amortization expense on acquisition-related intangibles within cost of sales increased to $71.5 million in 2019 from $56.7 million in 2018. The increase was due to the asset acquisition from Formulatrix as further discussed in Note 5 "Acquisitions and Divestitures". We expect that our acquisition-related intangible amortization will increase as a result of further acquisitions in the future.

Research and Development

Research and development expenses fell by 3% to $157.4 million (10% of net sales) in 2019, from $161.9 million (11% of net sales) in 2018. The net decrease reflected higher investments in QIAstat-Dx and the planned launch of a digital PCR system against the significant reduction in costs following the decision to discontinue development of NGS-related instrument systems. 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, but to decline as a percentage of sales in 2020 compared to 2019.

Sales and Marketing

Sales and marketing expenses were essentially unchanged at $391.9 million (26% of net sales) in 2019 compared to $392.3 million (26% of net sales) in 2018. Sales and marketing expenses were primarily associated with personnel, commissions, advertising, trade shows, publications, freight and logistics expenses, and other promotional expense. Higher costs in 2019 related to an increase in sales personnel, which was partially offset by lower share-based compensation and reduced third-party marketing activities. We anticipate that absolute sales and marketing costs will increase along with new product introductions and growth in sales of our products, but decrease as a percentage of sales.

General and Administrative

General and administrative expenses increased by 7% to $112.3 million (7% of net sales) in 2019 from $104.6 million (7% of net sales) in 2018. The increase in general and administrative expenses in 2019 was primarily due to higher licensing costs in connection with continued investments in information technology systems, including cyber security, across the organization as well as an increase in the number of administrative personnel and higher share-based compensation expenses.

Acquisition-Related Intangible Amortization

Amortization expense related to developed technology and patent and license rights acquired in a business combination is included in cost of sales. Amortization of trademarks and customer base acquired in a business combination is recorded in operating expense under the caption “acquisition-related intangible amortization.” Amortization expenses of intangible assets not acquired in a business combination are recorded within cost of sales, research and development, or sales and marketing line items based on the use of the asset.

During 2019, amortization expense on acquisition-related intangibles within operating expense decreased to $30.0 million, compared to $39.0 million in 2018. The decrease follows the full amortization of assets previously acquired in 2007. We expect acquisition-related intangible amortization will increase as a result of our future acquisitions.

Restructuring, Acquisition, Integration and Other, net

Restructuring, acquisition, integration and other, net was expense of $199.8 million in 2019 as compared to $28.7 million in 2018. During 2019, $163.0 million of charges are included in the 2019 Restructuring program as further discussed in Note 6 "Restructuring and Impairments". We expect to incur additional restructuring cost in 2020 as disclosed therein. In addition, during 2019, we continued to incur acquisition and integration costs related to the acquisitions discussed in Note 5 "Acquisitions and Divestitures". In addition, a $7.4 million gain from the reduction in the fair value of contingent consideration was recognized during 2019 discussed in Note 15 "Financial Instruments and Fair Value Measurements". Further, as we further integrate acquired companies and pursue opportunities to gain efficiencies, we expect to continue to incur additional business integration costs in 2019.

Long-lived Asset Impairments

Impairments to intangible assets and property, plant and equipment in 2019 totaled $140.0 million, of which $138.8 million was incurred in connection with the 2019 restructuring measures as further discussed in Note 6 "Restructuring and Impairments". During 2018, impairments to property, plant and equipment included $1.6 million related to the 2017 Restructuring program also discussed in Note 6 and $6.3 million related to strategic shifts in our business.

Other Income (Expense)

Total other expense, net was $51.6 million in 2019, compared to $40.8 million in 2018. Total other expense, net is primarily the result of interest expense, partially offset by interest income and other income (expense), net.

For the year ended December 31, 2019, interest income increased to $22.1 million from $20.9 million in 2018. 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" in the accompanying consolidated financial statements and other components including the interest portion of operating lease transactions. Interest income earned in 2019 includes interest on higher cash balances following the issuance of cash convertible notes in November 2018.

Interest expense increased to $74.2 million in 2019, compared to $67.3 million in 2018. Interest costs primarily relate to debt, discussed in Note 16 "Lines of Credit and Debt" in the accompanying consolidated financial statements and the increase in interest expense reflects the issuance of cash convertible notes in November 2018 which bear interest at a higher rate than the notes that matured in 2019.

Other income (expense), net was $0.4 million of income for the year ended December 31, 2019. Other income includes $7.8 million of upward adjustments resulting from observable price changes for non-marketable investments not accounted for under the equity method, $2.1 million in income from equity-method investments and a $0.7 million gain from receipt of shares in settlement of a zero-book value financial instrument held with a third party, all as discussed further in Note 10 "Investments". This income was partially offset by impairments, including $4.8 million of impairments in non-marketable investments accounted for under the equity method as discussed further in Note 10 "Investments", and net losses on foreign currency of $5.7 million for the year ended December 31, 2019.

Other income (expense), net was $5.6 million of income for the year ended December 31, 2018. Other income includes $13.1 million of upward adjustments resulting from observable price changes for non-marketable investments not accounted for under the equity method, a $5.1 million gain from the sale of our interest in a non-publicly traded company and $2.6 million in income from equity-method investments, all as discussed further in Note 10 "Investments". Additionally in 2018, we recorded a divestiture gain of $8.0 million as discussed in Note 5 "Acquisitions and Divestitures". This income was partially offset by impairments, including $6.1 million of impairments in non-marketable investments accounted for under the equity method as discussed further in Note 10, and net losses on foreign currency of $12.3 million for the year ended December 31, 2019.

Provision for Income Taxes

Our effective tax rates differ from The Netherlands statutory tax rate of 25% due in part to our operating subsidiaries being exposed to tax rates ranging from zero to 35%. In 2019 and 2018, our effective tax rates were 46.7% and 15.7%, respectively. The comparison is impacted by pre-tax book income which was lower in 2019 at a pre-tax book loss of $77.8 million compared to pre-tax book income of $225.7 million in 2018. Fluctuations in the distribution of pre-tax (loss) income among our operating subsidiaries can lead to fluctuations of the effective tax rate in the consolidated financial statements. In 2019 and 2018, tax expense on foreign operations was favorably impacted by lower income tax rates and partial tax exemptions on foreign income primarily derived from operations in Germany, Singapore, Switzerland, Ireland, Dubai and Luxembourg. These foreign tax benefits are due to a combination of favorable tax laws, regulations, rulings, and exemptions in these jurisdictions. In particular, intercompany foreign royalty income in Germany is statutorily exempt from trade tax. Further, we have intercompany financing arrangements through Luxembourg, Dubai and Ireland in which the intercompany income is partially exempt.

See Note 17 "Income Taxes" to the consolidated financial statements for a full reconciliation of the effective tax rate to The Netherlands statutory rate.

In future periods, our effective tax rate may fluctuate from similar or other factors as discussed in “Changes in tax laws or their application could adversely affect our results of operations or financial flexibility” in the “Risks” section above.

Foreign Currencies

QIAGEN N.V.’s reporting currency is the U.S. dollar, and most of our subsidiaries’ functional currencies are the local currencies of the countries in which they are headquartered. All amounts in the financial statements of entities 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 shareholders’ equity at historical rates. Translation gains or losses are recorded in shareholders’ equity, and transaction gains and losses are reflected in net income. The net loss on foreign currency transactions is included in other income (expense), net, and in 2019, 2018 and 2017 was $5.7 million, $12.3 million, and $3.3 million, respectively.

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 intercompany 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 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" to the accompanying consolidated financial statements.

Liquidity and Capital Resources

To date, we have funded our business primarily through internally generated funds, debt, and private and public sales of equity. Our primary use of cash has been to support continuing operations and our investing activities including capital expenditure requirements and acquisitions. As of December 31, 2019 and 2018, we had cash and cash equivalents of $623.6 million and $1.16 billion, respectively. We also had restricted cash of $5.7 million and short-term investments of $129.6 million at December 31, 2019. 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, 2019, cash, cash equivalents and restricted cash had decreased by $529.7 million from December 31, 2018, primarily as a result of cash used financing activities of $639.1 million and cash used in investing activities of $222.3 million, partially offset by cash provided by operating activities of $330.8 million. As of December 31, 2019 and 2018, we had working capital of $618.9 million and $1.18 billion, respectively.

Operating Activities

For the years ended December 31, 2019 and 2018, we generated net cash from operating activities of $330.8 million and $359.5 million, respectively. While the net loss was $41.5 million in 2019, non-cash components in income included $231.5 million of depreciation and amortization and $144.8 million non-cash impairments primarily recorded in connection with the restructuring discussed in Note 6 "Restructuring and Impairments", $40.8 million of amortization of debt discount and issuance costs and $65.9 million of share-based compensation expense. Operating cash flows include a net decrease in working capital of $28.6 million excluding changes in fair value of derivative instruments. The current period change in working capital is primarily due to increased inventories and accounts receivable and decreased accrued and other current liabilities. Because we rely heavily on cash generated from operating activities to fund our business, a decrease in demand for our products, longer collection cycles or significant technological advances of competitors would have a negative impact on our liquidity.

Investing Activities

Approximately $222.3 million of cash was used in investing activities during 2019, compared to $211.4 million during 2018. Investing activities during 2019 consisted principally of $294.0 million for purchases of short-term investments, $68.1 million in cash paid for acquisitions, net of cash acquired as discussed in Note 5 "Acquisitions and Divestitures", $118.0 million in cash paid for purchases of property and equipment, as well as $156.9 million paid for intangible assets and $5.2 million paid for strategic investments in privately and publicly held companies as discussed in Note 10 "Investments", partially offset by $396.1 million from the sale of short-term investments. Investing activities during 2018 consisted principally of $172.8 million of cash paid for acquisitions, net of cash acquired, $568.0 million for purchases of short-term investments, partially offset by $691.8 million from the sale of short-term investments.

Financing Activities

For the year ended December 31, 2019, cash used in financing activities was $639.1 million compared to cash provided by financing activities of $360.4 million in 2018. Financing activities during 2019 consisted primarily of $506.4 million repayments of long-term debt including $430.0 million for the amount due for the 2019 Cash Convertible Notes, $73.0 million for amounts due for the U.S. Private Placement and $3.4 million for a portion of the 2021 Cash Convertible Notes which was converted during the contingent conversion period as discussed further in Note 16 "Lines of Credit and Debt". In addition, repurchases of QIAGEN shares totaled $74.5 million during 2019.

In 2018, cash provided from financing activities totaled $360.4 million primarily due to $494.9 million net cash proceeds from the 2018 cash convertible offering. We used $97.3 million of the proceeds from the from the cash convertible offering to pay the premium for a call option related to the cash convertible notes, and simultaneously received $72.4 million from the sale of Warrants, for a net cash outlay of $24.9 million for the call spread overlay. Cash provided in 2018 was further offset by the repurchase of QIAGEN shares totaling $104.7 million.

Cash used in other financing activities during the year ended December 31, 2019 and 2018 consisted primarily of $10.5 million and $5.5 million paid for contingent consideration, respectively, together with $0.4 million cash received and $2.0 million cash paid in connection with derivative collateral arrangements, respectively.

Other Factors Affecting Liquidity and Capital Resources

In November 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 $470.0 million, after payment of the net cost of the Call Spread Overlay and transaction costs paid through December 31, 2019 as described more fully in Note 16 "Lines of Credit and Debt". 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 which are due in 2023 (2023 Notes), which are discussed fully in Note 16 "Lines of Credit and Debt". Interest on the 2023 Notes is payable semiannually in arrears at a rate of 0.500% per annum. The 2023 Notes will mature on September 13, 2023 unless repurchased or converted in accordance with their terms prior to such date.

Additionally in 2017, we completed a German private placement of $329.9 million, net of issuance costs, consisting of several tranches denominated in either U.S. dollars or Euro at either floating or fixed rates and due at various dates through June 2027 as described in Note 16 "Lines of Credit and Debt".

In October 2016, we extended the maturity of our €400 million syndicated revolving credit facility, which now has a contractual lifetime until December 2021 of which no amounts were utilized at December 31, 2019. The facility can be utilized in Euro, British pounds sterling, Swiss franc or U.S. dollar and bears interest of 0.40% to 1.20% above three months EURIBOR, or LIBOR in relation to any loan not in euro, and is offered with interest periods of one, two, three or six months. We have additional credit lines totaling €26.6 million with no expiration date, none of which were utilized as of December 31, 2019.

In March 2014, we issued $730.0 million aggregate principal amount of Cash Convertible Senior Notes of which $433.4 million was paid in 2019 and $296.6 million is due in 2021 (2021 Notes). Interest on the 2021 Notes is payable semiannually in arrears on September 19 of each year, at rate of 0.875% per annum. The 2021 Notes will mature on March 19, 2021, unless repurchased or converted in accordance with their terms prior to such date.

In October 2012, we completed a U.S. private placement through the issuance of new senior unsecured notes at a total amount of $400 million with a weighted average interest rate of 3.66% (settled on October 16, 2012). The notes were issued in three series: (1) $73 million 7-year term due and paid in 2019 (3.19%); (2) $300 million 10-year term due in 2022 (3.75%); and (3) $27 million 12-year term due in 2024 (3.90%).

As of December 31, 2019, we carry $1.7 billion of long-term debt, of which $285.2 million is current. We did not hold any material finance leases as of December 31, 2019.

In connection with certain acquisitions, we could be required to make additional contingent cash payments totaling up to $179.4 million based on the achievement of certain revenue and operating results milestones as further discussed in Note 20 "Commitments and Contingencies".

In January 2018, we announced our fifth share repurchase program of up to $200 million of our common shares. During 2019, we repurchased 2.0 million QIAGEN shares for $74.5 million (including transaction costs) bringing the total shares repurchased under this program to 4.9 million for $179.1 million (including transaction costs). Repurchased shares will be held in treasury in order to satisfy various obligations, which include employee share-based remuneration plans. Repurchased shares will be held in treasury in order to satisfy various obligations, which include employee share-based remuneration plans.

In January 2017, we completed a synthetic share repurchase that combined a direct capital repayment with a consolidation of shares. The transaction was announced in August 2016 and involved an approach used by various large, multinational Dutch companies to provide returns to shareholders in a faster and more efficient manner than traditional open-market purchases. $243.9 million was repaid to shareholders through the transaction and the outstanding number of common shares was reduced by 8.9 million, or 3.7%. As discussed further in Note 18 "Equity", the capital repayment program was completed in January 2017.

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 stock will impact the timing and volume of the issuances. Additionally, we may make future acquisitions or investments requiring cash payments, the issuance of additional equity or debt financing.

We believe that funds from operations, existing cash and cash equivalents, together with the proceeds from our public and private sales of equity, and availability of financing facilities, will be sufficient to fund our planned operations and expansion during 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 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.

Off-Balance Sheet Arrangements

Other than our former arrangements with QIAGEN Finance as discussed in Note 16 "Lines of Credit and Debt" to the consolidated financial statements, we did not use special purpose entities and do not have off-balance sheet financing arrangements as of and during the years ended December 31, 2019, 2018 and 2017.

Contractual Obligations

As of December 31, 2019, our future contractual cash obligations are as follows:

In addition to the above, and pursuant to the purchase agreements for certain acquisitions and other contractual arrangements, we could be required to make additional contingent cash payments totaling up to $179.4 million based on the achievement of certain revenue and operating results milestones as follows:

Of the $179.4 million total contingent obligation, we have assessed the fair value at December 31, 2019 to be $162.2 million, of which $142.6 million is included in accrued and other current liabilities and $19.6 million is included in other long-term liabilities in the accompanying consolidated balance sheet.

Liabilities associated with uncertain tax positions, including interest and penalties, are currently estimated at $60.6 million as of December 31, 2019 and are not included in the table above, as we cannot reasonably estimate when, if ever, an amount would be paid to a government agency. Ultimate settlement of these liabilities is dependent on factors outside of our control, such as examinations by each agency and expiration of statutes of limitation for assessment of additional taxes.

Dividend

QIAGEN has not paid a cash dividend since its inception and does not intend to pay any dividends in the foreseeable future. We intend to retain any earnings for the development of the business.

Credit Rating

QIAGEN is currently not rated by any credit rating agency.