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Luminex Q3 Revenues Rise 35 Percent on Coronavirus Testing Demand

NEW YORK – Luminex reported after the close of the market on Thursday that its 2020 third quarter revenues were up 35 percent year over year, driven largely by growth associated with the COVID-19 pandemic.

For the quarter ended Sept. 30, the Austin, Texas-based diagnostics company reported revenues of $106.1 million compared to $78.7 million in the year-ago quarter, slightly above preliminary revenues reported in October and beating analysts' average estimate for revenues of $105.0 million.

For Q3 2020, the firm reported system revenues of $19.5 million, up 28 percent year over year from $15.2 million. Consumables revenues were $11.8 million, down 12 percent year over year from $13.4 million. On a conference call to discuss the earnings results, Luminex President, CEO, and Chairman Nachum Shamir said the firm's molecular diagnostics customers were primarily hospital and reference laboratories, and the majority of those customers work with Luminex under rental reagent agreements, with commitments of up to five years.

Q3 royalty revenues were $9.6 million, down 26 percent from $13.0 million; assay revenues were $55.6 million, up 89 percent year over year from $29.5 million; service revenues were $6.0 million, up 11 percent year over year from $5.3 million; and other revenues were $3.5 million, up 56 percent year over year from $2.3 million.

CFO Harris Currie said on the conference call that clinical tools and life sciences segments were "adversely impacted" by the pandemic, although the firm's flow cytometry sales were showing signs of improvement.

Luminex sold or contracted 87 molecular diagnostics instruments during the third quarter, primarily its Aries system, which has a SARS-CoV-2 test cleared for use. Shamir said the company is at maximum capacity for the Aries tests but anticipates the Aries capacity expansion will be completed by the end of 2020, resulting in capacity of 5 million tests per year for all Aries assays combined. He added the company expects to ship about 400,000 Aries tests in the fourth quarter. At the end of the third quarter, Luminex had a backlog of COVID-19-related Aries tests equal to $9 million in revenue that it was unable to ship due to capacity constraints, but those orders will be filled in the coming quarter, Shamir said. Currie added that the firm ended Q3 with 36 million orders, some placed for future delivery and some the company wasn't able to provide that would be filled in Q4.

The firm is working on an Aries combined influenza A and B, SARS-CoV-2, and respiratory syncytial virus test for submission to FDA early next year, and Shamir said he expects "demand for those kinds of multiplex tests will be high for years to come." Luminex is putting SARS-CoV-2 targets on all PCR-based multiplex respiratory tests, he added. Respiratory-related products comprised more than 60 percent of total assay sales, Currie said.

Luminex also shipped 2.1 million NxTag tests during the quarter and has seen an almost 300 percent increase in demand for respiratory NxTag tests, including SARS-CoV-2 tests. The firm is currently waiting on Emergency Use Authorization from the US Food and Drug Administration for its NxTag RPP-plus SARS-CoV-2 consolidated panel, which it expected to receive in the third quarter. It is also waiting on approval for its standalone SARS-CoV-2 Verigene I test, Shamir said. The firm currently has the capacity for almost 2 million tests per year for Verigene I and II tests, he continued.

During the quarter, Luminex received two awards from the US Department of Health and Human Services' Biomedical Advanced Research and Development Authority, one for $5.4 million to support an updated Nxtag Respiratory Pathogen panel that would include SARS-CoV-2, and one for $683,500 to support enhancement of the firm's COVID-19 Multiplex Antibody test.

Shamir said Luminex has submitted monthly responses to the FDA in response to a warning letter it received in June saying the firm had not "adequately validated, reviewed, or approved [a] manufacturer change for the calibration heater test fixtures" on its Verigene SP instrument and hybridization heater. The responses have outlined a correction plan and how the plan will be implemented, he added.

Luminex reported a Q3 net income of $1.8 million, or $.04 per share, compared to a net loss of $5.3 million, or $.12 per share, a year earlier, and beat the analysts' average estimate for a loss of $.20 per share.

Luminex said that its R&D expenses for Q3 rose 6 percent to $14.1 million from $13.3 million a year earlier. Its SG&A costs were up 11 percent year over year to $34.9 million from $31.4 million. Higher R&D expenses were related to COVID-19 tests and other product development, Currie said.

The company ended the quarter with $308.5 million in cash and cash equivalents.

Luminex adjusted its full-year 2020 revenue expectations to approximately $410 million, which would be up 23 percent from 2019's revenue total. Prior to the release of the financial results, analysts on average expected revenues of $420.6 million in 2020. The firm previously predicted $415 million in revenues for the year, but the delay in EUAs for COVID-19 tests led them to adjust guidance, Currie said. The firm also announced preliminary revenues for 2021 of at least $475 million.

Shamir said in a statement that revenue growth in 2021 will likely be driven by the company's Aries manufacturing expansion, along with "a number of additional new products in development, including those supporting our COVID-19-related efforts and the other pipeline products in our diverse portfolio."