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Meridian Fiscal Q1 Revenues Down 2 Percent

NEW YORK (GenomeWeb) – Meridian Bioscience today reported its fiscal first quarter revenues decreased approximately 2 percent due primarily to volume and pricing pressures in its molecular and gastrointestinal product lines. The firm also slightly lowered its 2019 guidance.

For the three months ended Dec. 31, 2018, revenues decreased to $51.5 million from $52.3 million a year ago, missing analysts' average estimate of $53.1 million. On a constant-currency basis, revenues decreased 1 percent. The results were consistent with a preliminary earnings report issued by Meridian earlier this month.

Reported revenues from the firm's diagnostics business were down 2 percent to $36.7 million, from $37.5 million in the prior year. The firm attributed the decline to volume pressures in a number of its molecular products and pricing in certain gastrointestinal lines, offset by growth in lead testing products.  

In a call to recap today's earnings report, Meridian CEO Jack Kenny specified that within the diagnostics business, molecular assay revenues were down 16 percent, partly offset by a 2 percent increase in immunoassay and blood chemistry diagnostics revenues.

"As we are in the early stages of our strategic plan, there is much work to be done to build a stronger, more sustainable diagnostics business," Kenny said in the call.

The firm has recently established strategic distribution partnerships for its calprotectin and Lyme disease tests, added a novel molecular cytomegalovirus assay for newborns, worked to drive its lead care testing into hospital networks, and partnered with DiaSorin to bring its Helicobacter pylori testing to the Liason platform, Kenny said.

Broken out by disease state, the diagnostics segment saw increases of 7 percent, 5 percent, and 2 percent in respiratory, lead testing, and other testing, respectively, compared to an 8 percent drop in revenues for GI assays. The latter was due, in part, to pricing challenges and competition in H. pylori testing, and pricing benefits to customers that were incorporated into renewed contracts with large diagnostics companies and reference labs, Kenny said, adding that the firm anticipates these pricing challenges to subside in the coming year.

Kenny also said he anticipated that last year's high volume of flu and other respiratory illness testing will make for difficult comparisons for the diagnostics business unit in the coming fiscal Q2. 

In response to an analyst question regarding getting the diagnostics business back to mid-single digit growth, Kenny said the firm believes there is opportunity from a commercial execution standpoint in "general blocking and tackling efforts," but for more sustainable and consistent growth the firm is planning product advancements focused on its Curian platform, as well as internal development and M&A possibilities to bring on a new molecular system, as previously reported, potentially to replace the Illumigene system, which was recently rebranded as Alethea.

Meridian's life science business revenues were flat at $14.8 million, which the firm said was due to timing of large bulk orders from its IVD manufacturing customers as well as a lumpy ordering pattern in China.

Net earnings for the quarter were up to $8.1 million, or $.19 per share, from $6.3 million, or $.15 per share a year ago. Adjusted EPS was $.20, beating analyst estimates for EPS of $.17.

The firm's R&D spending during the quarter decreased to $4.0 million from $4.4 million. Its Q1 SG&A expenses also decreased to $16.5 million from $18.0 million.

Meridian finished the quarter with $61.5 million in cash and cash equivalents.

For fiscal 2019, the company lowered its guidance overall to a flat 2 percent growth in consolidated net revenues, from a prior guidance of 2 percent to 4 percent growth. It had previously guided for GAAP and non-GAAP EPS of $.74 to $76, but has now lowered the GAAP guidance to $.72 to $74. Analysts are expecting revenue growth in the 4 percent range, and earnings of $.76 per share for the year.

Meridian's shares were down nearly 6 percent to $15.87 in morning trading on the Nasdaq.

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