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Luminex Q2 Revenues Rise 4 Percent

NEW YORK – Luminex reported after the close of the market on Wednesday that its second quarter revenues rose 4 percent.

For the three months ended June 30, the firm reported revenues of $83.1 million, up from $79.6 million a year ago, and beating the consensus Wall Street estimate of $81.7 million.

The firm reported Q2 systems revenues of $18.6 million, up 58 percent year over year from $11.8 million. Its consumables revenues were $12.7 million, up 15 percent from $11 million in Q2 2018. Royalty revenues were $12.8 million, up 10 percent year over year from $11.6 million; assay revenues were $31.4 million, down 22 percent year over year from $40.2 million; service revenues were $6 million, up 100 percent year over year from $3 million; and all other revenues were $1.5 million, down 25 percent year over year from $2 million.

The firm's flow cytometry business contributed about $13.2 million, or 16 percent of the firm's consolidated revenue in the second quarter, offsetting a revenue decline associated with a loss of business from LabCorp.

Royalty revenues in the second quarter reflected more than $140 million of royalty-bearing end-user sales on Luminex technology, a year-over-year increase of about 10 percent.

The firm said that in Q2, its year-over-year sample-to-answer revenues grew 29 percent and sample-to-answer assay revenues grew 31 percent.

Luminex also noted that it placed 48 sample-to-answer molecular systems under contract in Q2 and had about 640 active sample-to-answer customers.

Luminex President and CEO Homi Shamir said in a statement that "by the end of 2019, we will have returned to consistent profitability and cash flow, and will be growing at an accelerated organic rate with an improving gross margin position."

Luminex reported a net loss in Q2 of $4.9 million, or $.11 per share, from net income of $5.7 million, or $.13 per share, a year earlier, missing analysts' average estimate for a loss of $.01. The firm said that its net loss was primarily driven by the departure of LabCorp revenue and the integration of the MilliporeSigma flow cytometry business that it acquired last year.

Shamir said on a conference call to discuss the firm's financial results that second-quarter revenues from its flow cytometry business were up more than 35 percent from the prior-year quarter.

"Fortunately, the majority of the unfavorable LabCorp comps are behind us with the much smaller sums of approximately $7 million and $3 million still to occur in Q3 and Q4," he said. The firm suffered a $13 million decline in LabCorp-related revenues in Q2.

Piper Jaffray Senior Research Analyst William Quirk said in a research note on Wednesday that given a "sharp increase in operating expenses due to the acquisition … [the investment bank's] forward earnings projections do not necessarily reflect [its] long-term profitability outlook." He consequently trimmed the bank's 2020 estimate for Luminex's earnings per share to $.28 from $.75.

Shamir noted on the call that at the end of June the firm announced it had submitted an application to the US Food and Drug Administration for clearance of its Aries MRSA Assay, a real-time, qualitative polymerase-chain-reaction test for the direct detection of methicillin-resistant Staphylococcus aureus (MRSA) DNA from nasal swabs in patients at risk for nasal colonization.

"At this time, the [MRSA] assay is the last planned regulatory submission on the Aries system, absent the identification of other meaningful opportunities for this platform," he said.

Shamir said that the firm anticipates filing an application with the FDA later this quarter for clearance of its Verigene II enteric panel, and in the fourth quarter for clearance of its Verigene II respiratory panel. He said that the firm continues to do R&D on its blood culture portfolio, which will have gram-positive, gram-negative, and fungal components, and that it is continuing with development of its Sensiplex instrument, which is an update of its current xMAP bead-based multiplexing system for research markets.

The firm's R&D costs were $15.0 million, up 28 percent from $11.7 million in Q2 2018, and its SG&A costs were $33.1 million, up 20 percent from $27.6 million.

Luminex ended the quarter with $63.3 million in cash and cash equivalents.

The company anticipates third quarter 2019 revenues will be between $80 million and $83 million. Luminex reaffirmed its full-year 2019 revenue guidance of $337 million to $343 million. Analysts, on average, expect Q3 revenues of $83.0 million and full-year 2019 revenues of $340.4 million.

The company said it is increasing its quarterly dividend by 50 percent to $.09 per share effective immediately with a record date of Sept. 26 and a payment date of Oct. 17.

In morning trading on the Nasdaq, shares of Luminex were up a fraction of 1 percent at $21.83.