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Luminex Q2 Revenues Rise 4 Percent, Shares Drop on LabCorp Business Exit

NEW YORK (GenomeWeb) – Luminex reported after the close of the market on Monday that its second quarter revenues rose 4 percent, driven in part by strong growth in automated sample-to-answer molecular products sales.

For the three months ended June 30, the firm reported revenues of $79.6 million, up from $76.5 million a year ago, and in line with the consensus Wall Street estimate.

Luminex President and CEO Homi Shamir said on a conference call to discuss its earnings results that Laboratory Corporation of America confirmed that its last order from Luminex for its NuSwab product, the foundation of the LabCorp women’s health portfolio, was placed in the second quarter. Analysts noted that the loss of the LabCorp business will impact Luminex's profitability and that the firm's earnings per share in the quarter was lower than their estimates.

As a result, in early morning trading on the Nasdaq on Tuesday, Luminex shares were down more than 20 percent at $27.60.

In Q2, systems sales rose 19 percent to $11.8 million from $9.9 million a year ago. Consumables revenues dropped 17 percent to $11 million from $13.3 million in Q2 2017.

Royalty revenues increased 7 percent year over year to $11.6 million from $10.8 million; assay revenue rose 6 percent to $40.2 million from $37.8 million; service revenue rose 7 percent to $3 million from $2.8 million; and all other revenues increased 5 percent to $2 million from $1.9 million.

Luminex said it shipped 361 multiplexing analyzers during the quarter, a combination of Magpix systems, LX systems, and Flexmap 3D systems, compared to 270 multiplexing analyzers shipped in the prior-year quarter.

Shamir said in a statement that the firm placed 65 sample-to-answer systems under contract in the quarter compared to 35 in the prior-year quarter. Luminex said that in all, it now has more than 500 sample-to-answer system customers.

The firm's total sample-to-answer molecular product revenue for Q2 rose 33 percent to $14.2 million from $10.7 million in the second quarter of 2017.

Sample-to-answer utilization per Verigene customer grew about 16 percent to $108,000 from $93,000 in the prior year quarter, and utilization per Aries customer grew about 43 percent year over year to $53,000 from $37,000.

Shamir said on the conference call that clinical trials for the firm's Verigene II system and gastrointestinal panel have started, and that clinical trials for its Verigene II respiratory panel trial will commence during the 2018-2019 flu season.

"As we have said previously, we plan to launch those two panels as close together as possible in 2019 to generate maximum market impact with the goal being to bring our blood culture panels to market shortly thereafter," Shamir said.

Luminex is developing a next generation xMAP platform and expects to provide a new system to the market in the second half of 2019 that delivers increased sensitivity, dynamic rates, and automation capability with backward compatibility, Shamir said.

Further, he noted, development of Verigene II-Plus, a module with a fluorometer within the Verigene II system, is moving forward as expected. In a research note on Monday, William Blair analyst Brian Weinstein said that he believes the Verigene II-Plus six-bay modular system, with random access capability, "can offer a valuable solution to customers given its customizability to run both low- and high-plex tests." He said that Luminex's management team has said that it can configure the Verigene II technology into smaller, near-patient devices.

In a research note on Tuesday, Piper Jaffray analyst William Quirk said that notwithstanding its automated MDx success, he still views 2018 as a building year for Luminex given the LabCorp setback to profitability. He noted that the firm missed analysts' average estimate for earnings per share in the quarter of $.24.

Luminex's net income rose 2 percent to $5.7 million, or $.13 per share, from $5.5 million, or $.13 per share, a year earlier. It reported adjusted earnings per share of $.15.

The firm's R&D costs fell 5 percent to $11.7 million from $12.3 million in Q2 2017, and its SG&A costs fell 2 percent to $27.6 million from $28.2 million.

Luminex ended the quarter with $139.0 million in cash and cash equivalents.

The company expects third quarter 2018 revenues to be between $72.5 million and $74.5 million, accounting for the loss of women’s health-related business from LabCorp. Luminex reaffirmed its full-year 2018 revenue guidance of $310 million to $316 million. Analysts, on average, expect Q3 revenues of $74.3 million and full-year 2018 revenues of $314.7 million.