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Luminex’s Q4 Revenues Fall 1 Percent on Weak Assay Sales

NEW YORK (GenomeWeb News) – Luminex said after the close of the market on Monday that its fourth quarter revenues fell 1 percent year over year on lower assay sales.

Total revenues for the three months ended Dec. 31, 2013, were $55.2 million, down from $55.5 million in the fourth quarter of 2012. The results fell short of the consensus Wall Street estimate of $56.6 million in revenues for the quarter.

By segment, assays and related product revenue fell 25 percent to $19.5 million from $25.9 million in the year-ago period.

CFO Harriss Currie in a statement called the softness in the Austin, Texas-based firm’s assay segment "temporary," and noted that the segment was "significantly affected by a number of items," including resolution of its molecular diagnostics distribution agreements after moving to a direct sales model, restructuring costs, and the bankruptcy of Natural Molecular Testing Corp., a Luminex client.

Luminex said that its technology and strategic partnership revenues rose 20 percent to $35.7 million from $29.7 million in Q4 2012. Luminex's royalty revenues spiked 23 percent to $9.3 million from $7.5 million in the prior-year period, and systems sales jumped 40 percent to $10 million from $7.1 million in the fourth quarter of last year. The company said it shipped 327 multiplex analyzers in the quarter, bringing its cumulative shipments to 10,737.

The firm's consumable revenues fell 3 percent to $12.1 from $12.4 million in the quarter, while assay revenues plummeted 24 percent to $18 million from $23.8 million.

On a call following the release of the results, CEO Patrick Balthrop attributed the decrease in assay revenues to changes in the US reimbursement environment, which mostly affected its genetic assay category, especially its cystic fibrosis sales to Laboratory Corporation of America, rather than sales of its infectious disease assays, such as its Gastrointestinal Pathogen Panel, which continue to grow.

"A lot of the headwinds that we experienced in the quarter … were in that genetic assay category as opposed to infectious disease," Balthrop said on the call. "Those are the areas that were most dramatically affected by some of those reimbursement changes, and what we experienced with our single largest customer, which obviously is a big genetic testing user."

Currie added that the slight drop in consumable revenues reflected "continued stabilization of purchase volumes" from LabCorp, which he said is Luminex's largest customer, as well as "some headwinds from our [life science research-]focused partners, through the lower research budgets in the US and with the implementation of sequestration earlier in the year."

All other revenues grew 25 percent to $5.9 million from $4.7 million in the quarter, Luminex said.

Luminex posted a profit of $5.1 million, or $0.12 per share, in the quarter, up from $4.3 million, or $.10 per share, in Q2 2012. On a non-GAAP basis, the firm reported a profit of $8.8 million, or $.21 per share, well above analysts' consensus estimate of $.07.

The company's R&D expenses fell 11 percent to $10.2 million from $11.5 million in the year-ago quarter. Its SG&A costs grew slightly, rising to $19.9 million from $19.6 million a year ago.

For full-year 2012, total revenues were up 5 percent to $213.4 million from $202.6 million in 2013, falling short of the consensus Wall Street estimate of $214.6 million.

Assays and related products were roughly flat at $81.4 million versus $81.6 million. Technology and strategic partnership revenues grew 10 percent to $132 million from $121 million, and system sales ticked up 2 percent to $31.7 million from $31.1 million.

In 2013, Luminex's consumables sales rose 1 percent to $48.5 million from $48 million in the prior year. Royalty revenues climbed 19 percent to $37 million from $31.2 million. Assay revenues declined 1 percent to $74.1 million from $75 million. All other revenues grew 27 percent to $22 million from $17.3 million.

Luminex posted a profit of $7.1 million, or $.17 per share, down from a profit of $12.4 million, or $.30 per share, in 2012. On a non-GAAP basis its 2013 EPS was $.62, beating the consensus estimate of $.14.

The firm's R&D costs in 2013 rose 5 percent year over year to $45 million from $43 million, while SG&A costs were up 21 percent to $87.3 million from $72.6 million.

Currie attributed the rise in full year R&D costs to "increased spending related to development of our Aries system and assays in the current quarter."

Aries is the name of Luminex's high-throughput, real-time PCR-based molecular diagnostics platform. The company unveiled the system, which is in beta testing, at the Association for Molecular Pathology in November. Balthrop said that Luminex is on track to introduce Aries in Europe in the second half of the year, followed by a US launch in early 2015.

The firm ended 2013 with $72.4 million in cash, cash equivalents, and short-term investments.

Luminex provided revenue guidance for full-year 2014 of between $225 million and $240 million, an increase of between 5 and 12 percent over its reported 2013 revenue and in line with consensus expectations of $234.9 million.

"We're very excited … about the planned launch for Aries in the second half of 2014," said Balthrop. Other priorities for the company this year include increasing adoption of the GPP, expanding sales of its pharmacogenomics assays, and growing its roster of clients who offer laboratory-developed tests on its platforms, he said.

In early Tuesday trade on the Nasdaq, shares of Luminex were up 2 percent at $18.64.

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