After expressing doubts about the health of the life sciences and drug-discovery markets last quarter, Molecular Devices last week took a more optimistic outlook on the two market segments as it reported revenue gains of 43 percent while nearly quadrupling its net income for the fourth quarter.
"Both markets are healthier and more stable but we're not saying exuberance," Joe Keegan, president and CEO of Molecular Devices, told analysts in a conference call. "We have liked what we are hearing from our selling organization in terms of market opportunities and accuracy in forecasting."
Molecular Devices completed its first full quarter after the acquisition of Axon Instruments, a $140-million cash-and-stock purchase that closed in July, reporting total revenues of $47.5 million, over the $33 million in revenues for same quarter last year. The company had net income of $14.6 million, compared to $3 million a year ago. The company took a one-time restructuring charge of $1.2 million for the Axon deal after taking a $5-million charge for acquired in-process R&D from Axon in the third quarter.
Molecular Devices did not provide details on the performance of the acquired Axon unit as it has integrated its products into both parts of its division structure. Also, the company did not provide details of any currency-exchange benefits.
The Sunnyvale, Calif.-based Molecular Devices, which had cash and cash equivalents of $30 million as of Dec. 31, reported $5.2 million in income from operations, compared to $4 million for the year ago quarter, a 30-percent improvement.
The company's top line benefited from a non-operating gain of $18.3 million, realized from its share of proceeds from the $205 million cash-and-stock purchase in September of privately held Upstate Group of Charlottesville, Va., by Atlanta-based Serologicals.
Molecular Devices had purchased a 20-percent equity interest in Argonex, Upstate's parent firm, for $10 million in cash in January 2001. The firms then entered into a long-term agreement to develop and market reagents for use in high-throughput screening. MDCC sells reagents and assay products that incorporate enzymes made by Upstate.
For the fourth quarter, Molecular Devices' R&D spend increased 52 percent to $7 million, from $4.6 million in Q4 2003, while its SG&A expenses climbed by 30 percent to $16.1 million for the quarter, compared to $12.3 million for the year-ago period.
Molecular Devices divides its product lines into two groups life sciences and drug discovery. Axon's product lines for cellular, neuroscience, and genomics applications have been integrated into the life-sciences division, along with the firm's legacy Maxline, MetaMorph, Skatron, and Threshold products. Axon's PatchXpress patch-clamp products and ImageXpress cellular imaging products joined MDCC's drug-discovery product line, which includes the IonWorks, FLIPR, Analyst, and Discovery-1 systems
"At this point, the [Axon] integration is complete," said Keegan. "We have combined all the technologies and the back offices."
He said the company plans to release a new imaging products Imaging DI and IMGXRS that will be driven by its MetaMorph software, which he gave as an example of the success of the integration effort. "This is an example of the two companies coming together," he said. "The software teams picked the best all-around athletes available, in terms of the software components, without having any kind of rivalry there."
Mo Krochmal ([email protected])