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Luminex Reports Flat Q1 Revenues, Shares Down on Missed Expectations

NEW YORK (GenomeWeb) – Luminex reported after the close of the market on Monday that its first quarter 2019 revenues were essentially flat year over year.

For the three months ended March 31, the firm reported revenues of $82.4 million, slightly down from $82.7 million a year ago, and falling short of the consensus Wall Street estimate of $83.1 million.

The miss on analyst expectations — driven in part by lower than expected respiratory product sales and a loss of business to Laboratory Corporation of America associated with women's health products — startled some investors. In early morning trading Tuesday on the Nasdaq, Luminex shares were down more than 6 percent to $22.65.

Systems revenues were $15.7 million, up 98 percent from $7.9 million a year ago. Consumables revenues were $10.7 million, down 10 percent from $11.9 million in Q1 2018. Royalties revenues were $14.2 million, up 16 percent from $12.2 million in the year-ago quarter, and assays revenues were $34.8 million, down 24 percent from $45.8 million. Service revenues were $5.4 million, up 87 percent from $2.9 million, and all other revenues were $1.6 million, down 14 percent from $1.9 million in Q1 2018.

The firm said that in the first quarter, flow cytometry contributed approximately $11.4 million in revenues, offsetting a revenue loss related to business it formerly conducted with LabCorp.

Royalty revenues in the quarter reflected $149 million of royalty-bearing end user sales on Luminex technology, which increased about 10 percent over the prior-year period.

The firm said that it placed about 50 sample-to-answer molecular systems under contract during the first quarter of 2019, and it had about 625 active sample-to-answer product customers.

"We have two more quarters to go until we emerge as a much more diversified company with increasing momentum that is past the loss of LabCorp," Homi Shamir, president and CEO of Luminex, said in a statement.  "During this time, we will continue to build a strong foundation through both our sample-to-answer portfolio and life sciences businesses. By the end of this year, we believe Luminex will be growing at a double digit rate, have improved gross margins, and will return to consistent profitability and cash flow."

This was the first quarter in which the loss of business to LabCorp "significantly impacted" the firm's results, Shamir said on a conference call to discuss Luminex's financial performance. "Thankfully, it will only impact our [revenue] comparison for the next two quarters, and then it will be largely behind us," he said.

Q1 revenues were also impacted by about 20 percent fewer patients presenting with respiratory-related symptoms compared to the prior year, he said. The weak flu season impacted its Q1 revenues by a few million dollars, affecting both sample-to-answer and non-automated systems, and the company's revenues this quarter were being compared to revenues obtained during a season with greater flu prevalence last year, he said.

Harriss Currie, the firm's CFO, senior vice president of finance, and treasurer, said on the conference call that a near doubling of its systems revenues year over year in the first quarter was primarily driven by its flow cytometry business, which Luminex acquired from MilliporeSigma last year. In Q1, year-over-year revenue growth for the flow business were above Luminex's expectations, he noted.

The company reported net income of $3.0 million, or $.07 per share, compared to $13.3 million, or $.30 per share a year earlier. Adjusted loss per share was $.07, missing the analysts' average EPS estimate of $.07 per share.

The firm said its net income was primarily driven by a discrete tax benefit of $6.6 million in the current quarter emanating from its Canadian subsidiary.

The company’s Q1 R&D costs rose 46 percent to $15.0 million from $10.3 million in Q1 2018, and its SG&A costs rose 22 percent to $31.5 million from $25.8 million.

Luminex ended the quarter with $61.7 million in cash and cash equivalents.

The firm anticipates second quarter 2019 revenue to be between $80 million and $83 million and reaffirmed its full-year 2019 revenue guidance of between $337 million and $343 million.

Analysts, on average, expect revenues of $82.4 million in the second quarter and $341.4 million for the year.

Piper Jaffrey analyst William Quirk said in a research note on Monday that Luminex's first quarter results were in-line with a transition-year outlook for the firm. Despite long-term growth opportunities — including for Verigene II, Sensiplex, and its flow cytometry business — the investment bank remains Neutral on Luminex and "on the sidelines during this transition year," he said.