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Luminex Q4 Revenues Grow 5 Percent on Assay Sales

NEW YORK (GenomeWeb) – Luminex said after the close of the market today that its fourth quarter revenues increased 5 percent year over year driven primarily by strong assay sales.

For the fourth quarter ended Dec. 31, 2014, Luminex reported $58.1 million in revenues compared to $55.2 million in the year-ago period and just below analysts' consensus estimate of $58.3 million.

The Austin, Texas-based molecular diagnostics firm reported $24.1 million in assay revenue, a 34 percent spike from $18 million in Q4 2014. In addition, royalty revenue increased 10 percent year over year to $10.2 million from $9.3 million. This tempered a 31 percent drop in system sales to $6.9 million from $10.0 million, and an 11 percent decline in consumable sales to $10.8 million from $12.1 million.

Meantime, all other revenue rose 6 percent in Q4 to $6.2 million from $5.9 million.

"Assay performance for both the quarter and full year was characterized by balanced growth across all of our major assay product lines," Luminex CFO Harriss Currie noted during a conference call recapping the company's earnings. "We experienced continued growth of our pharmacogenomics portfolio, and [xTag GPP], coupled with recovery from the reimbursement challenges experienced in 2013. For the quarter, infectious disease assay sales comprised 67 percent of total assay sales, with genetic testing sales comprising 33 percent. This compares to 75 percent and 25 percent, respectively, in the prior-year fourth quarter."

Luminex posted a profit of $22.8 million, or $.53 per share, in the quarter, compared to $5.1 million, or $.12 per share in the same quarter a year ago. On an adjusted basis, the company's Q4 EPS was $.19 per share, besting the Wall Street estimate of $.12 per share. The Q4 2014 results also included a $12.6 million income tax benefit compared to a $350,000 income tax expense recognized in Q4 2013.

The company's fourth quarter R&D costs were up 2 percent year over year at $10.4 million, while SG&A expenses rose slightly to $20.9 million from $19.9 million.

During the conference call, CEO Nachum Shamir noted that during Q4 Luminex made substantial progress toward commercialization of its two most important future platform products – the Aries MDx system and the highly multiplexed NxTag assays, particularly its NxTag RPP (respiratory pathogen panel).

"We completed the final stage of development [for Aries] and are now actively preparing for clinical trials, which are on track to begin in March," Shamir said. "Because the majority of patient samples have already been collected, we are very confident in our ability to maintain the current schedule … [of] a 510(k) submission targeted for late summer and IVD clearance in the US for the system and [herpes simplex virus] assay during the fourth quarter of 2015."

Meantime, he added, the company also completed development on NxTag RPP, which is targeted at moderate- to high-volume labs in the multiplex market, and is on schedule to begin clinical trials this week. "NxTag will follow a similar timeline to Aries, with FDA clearance targeted for the fourth quarter of 2015," Shamir said.

Shamir, who joined the company in the third quarter of last year and immediately set out to conduct a strategic review, noted that the company "recently implemented several operational improvements designed to create additional synergies across the organization."

For example, "we combined our sales and marketing organization, particularly at the management level, which we believe will allow us to better serve our customers … more effectively and efficiently," Shamir said. "Another example involves changes in our R&D organization. Now that we've finished development of NxTag RPP, we are redirecting R&D resources in our Toronto location to accelerate development of the first wave of Aries assays, as well as additional assays after launch, to ensure that we come to the market with the broadest menu."

For full-year 2014, Luminex reported record revenues of $227.0 million, up 6 percent from $213.4 million in 2013 and just besting analysts' consensus estimate of $226.9 million.

By segment, system sales dropped 8 percent to $29.2 million from $31.8 million; consumables were down to $48.3 million from $48.5 million; royalty revenue rose 7 percent to $39.4 million from $37.0 million; and assay revenue jumped 18 percent to $87.7 million from $74.1 million. Meantime, all other revenues rose 2 percent to $22.4 million.

Luminex posted a profit of $39.0 million, or $.92 per share, in 2014 compared to $7.1 million, or $.17 per share, in 2013. On an adjusted basis, EPS was $.90 per share, beating analysts' estimate of $.52 per share.

The company's R&D costs dropped 4 percent to $43.1 million in 2014 from $45.0 million in 2013, while its SG&A expenses fell 5 percent to $82.8 million from $87.3 million.

Luminex ended 2014 with cash and cash equivalents of $91.7 million.

For full-year 2015 Luminex provided guidance of between $230 and $236 million in revenues as its consumables revenue is expected to remain under pressure due to inventory management issues by its largest partner. The 2015 guidance also reflects somewhat conservative estimates for the cystic fibrosis portion of assay revenue, given the potential impact of a competitive technology, namely next-generation sequencing.

"The pressure that NGS can provide on our CF testing portfolio really works most efficiently in centralized labs, of which our largest customer is a centralized lab," Currie said during the call. "In more distributed testing, currently, the cost of the system and operational efficiencies that have to be realized wouldn't justify the switch; but, in a highly centralized core lab, it certainly makes a lot more sense. That's where the pressure is. CF certainly wouldn't go to zero, but following the loss of several million dollars of revenue this year, in the event of a full transition, that number could be $10 million in 2016."

Luminex said that it anticipates first-quarter 2015 revenue to be between $55 million and $58 million.