NEW YORK (GenomeWeb News) – Luminex reported after the close of the market Monday that its third quarter revenues grew 1 percent over the third quarter of 2012, but the Austin, Texas-based molecular diagnostics company lowered its revenue guidance for the year, citing US reimbursement issues.
Luminex's total revenues for the three months ended Sept. 30 were $50.8 million, compared to $50 million in the third quarter of 2012. The firm fell short of analysts' consensus expectations for revenue of $54.7 million.
The company reported third quarter assay revenue of $16.1 million, down from $16.4 million in the year-ago period. According to Luminex, sales of its assays for infectious disease testing, such as its Respiratory Virus Panel and its Gastrointestinal Pathogen Panel, generated 64 percent of total assay sales in the quarter, while sales of the firm's genetic testing assays contributed the remaining 36 percent.
Sales of Luminex's multiplexing analyzers also decreased in Q3. The company posted Q3 systems sales of $7.6 million, down 11 percent from $8.5 million in Q3 2012. Luminex said it shipped 280 analyzers in the quarter, including 135 MagPix systems, 128 LX systems, and 17 FlexMap 3D systems, with cumulative to date analyzer shipments of 10,410.
Its consumables sales were down slightly to $12.8 million from $12.9 million, but its royalty revenue was up 17 percent year over year at $9 million versus $7.7 million.
CEO Patrick Balthrop on an earnings call following the release of the results attributed the firm's "mixed performance" to reimbursement issues in the US.
"The protracted administrative issues in the US related to reimbursement of certain molecular diagnostic assays have affected Luminex, the industry, and our customers during the third quarter," he said.
Some of Luminex's customers have been experiencing delays in receiving reimbursement, or lower reimbursement, for tests this year after the US Centers for Medicare & Medicaid Services moved to the gap-fill process for pricing new codes for molecular diagnostics.
Balthrop said that Luminex experienced a "significant order delay" from its largest assay customer at the end of the quarter because of these changes. Had that order been booked and shipped, Balthrop said that Luminex would have met its own internal expectations for the quarter and its Q3 assay revenues would have grown 16 percent year over year.
Still, he said that the company believes the impact of changes in US reimbursement to be a "transient issue" that should be resolved when the new reimbursement rates are published next year.
Balthrop also noted that Luminex shipped $2 million worth of assays to its distributors last year ahead of its switch to a direct sales model for its molecular diagnostics business in 2013. Factoring in the order delay and adjustments related to that $2 million shipment, Balthrop said that assay revenues actually grew 20 percent in Q3 compared to the year-ago period.
Another issue impacting Luminex during Q3 was the Chapter 11 bankruptcy protection filing of its customer Natural Molecular Testing, or NMTC. Luminex had touted publicly its relationship with the Seattle-based testing company on several occasions since NMTC adopted its platform for routine pharmacogenomic testing earlier this year.
While Balthrop said that Luminex has elected to take full allowance against accounts receivable from NMTC, he stressed that the NMTC balance was related to a sale that occurred before NMTC launched its Personalized Medicine Panel and represents less than 2 percent of Luminex's total revenue.
Luminex reported net income of $796,000, or $.02 per share, in Q3 compared to net income of $1.6 million, or $.04 per share, in the same period of 2012. On a non-GAAP basis, the firm posted net income of $2.3 million, or $.06 per share, down from $6.4 million, or $.16 per share, from the prior year period. Analysts, on average, had expected EPS of $.11.
On the call CFO Harriss Currie attributed the decline in non-GAAP income to the inclusion of the NMTC expense.
Luminex's SG&A costs climbed 14 percent in the quarter to $21.5 million from $19.5 million in Q3 2012, while its R&D costs fell 8 percent to $10.3 million from $11.2 million in Q3 2012. Currie attributed the rise in SG&A costs in part to the company's decision to move to a direct sales model for its molecular diagnostics business earlier this year.
Luminex ended the quarter with cash and cash equivalents of $57.2 million and short-term investments of $5.5 million.
The company also revised its 2013 annual revenue guidance to a range of between $212 million and $217 million from earlier guidance of between $220 million and $230 million.
Currie said that the company revised its guidance because it is "cautious about the life science reagents market" given current reimbursement conditions. He said that the "real swing factor" in the company's forecast is its expectations for assay sales from reference laboratory customers, whose heightened management given the reimbursement climate could significantly impact the firm's quarterly results.
Currie reiterated that the reimbursement issues are expected to be temporary, but added that it would be prudent for the firm to revise its financial forecast.
In Tuesday morning trade on the Nasdaq, shares of Luminex were down around 8 percent at $17.90.