This story has been updated with information from the company's earnings call
NEW YORK – Meridian Bioscience reported on Friday morning a 75 percent year-over-year jump in its fiscal third quarter revenues, driven by 313 percent revenue growth in its life science business.
The Cincinnati-based life science and diagnostics firm recorded total revenues of $84.8 million compared to $48.4 million a year ago, beating analysts' average estimate for revenues of $66 million.
Its life science revenues for the quarter were $63.2 million compared to $15.3 million a year ago. During the quarter, the company broadened its portfolio of life science COVID-19-related products to include key reagents used by diagnostics manufacturers to develop rapid antigen tests.
Within the segment, Meridian Bioscience's fiscal Q3 molecular reagent product revenues spiked by 605 percent year over year to $38.8 million from $5.5 million, while immunological reagent revenues also skyrocketed, growing 149 percent year over year to $24.4 million from $9.8 million.
Meridian Bioscience's diagnostics revenues were down 35 percent year over year to $21.6 million from $33.1 million as stay-at-home orders reduced demand for non-critical care testing. Within diagnostics, revenues for molecular assays declined 46 percent to $3.2 million from $5.9 million, while revenues from immunoassays and blood chemistry assays declined 32 percent to $18.4 million from $27.2 million.
The firm experienced "significant headwinds to demand in most [non-COVID-19] products," Meridian Bioscience CFO Bryan Baldasare said on a conference call to discuss the financial results, while its life science business delivered almost as much revenue in the quarter as in all of 2019.
"This performance exceeded our expectation due to robust demand for enzyme mixes used in COVID-19 PCR tests and SARS-CoV-2 antigens used in high-volume antibody tests," he said. "We estimate that increased revenue from the pandemic [in Q3] was $48 million, with $32 million for molecular products."
Jack Kenny, the firm's CEO, noted on the call that for many companies in the healthcare industry without COVID-19 specific products, the past quarter was a major challenge. "The results of our diagnostics segment in the quarter suggested that should have been the case for Meridian as well, but the strength of our diversified business shined through and resulted in the best quarter of our 40-plus year history," he said.
Kenny added that the company's molecular reagents are in more than 35 SARS-CoV-2 assays and its raw materials for COVID-19 antibody tests are in more than 10 assays. "We plan to continue increasing the number of shots on goal with the addition of the antibody-paired [product] in COVID-19 rapid antigen tests and the introduction of our own diagnostics test," he said.
Meridian Bioscience noted that during the quarter it locked down the design of a PCR-based COVID-19 assay it is developing for its Revogene system and expects submission to the US Food and Drug Administration for Emergency Use Authorization this fall.
The company added that it reinitiated clinical trials at a slower pace than normal for important gastrointestinal products, including a GI panel, and C. difficile and Campylobacter enteritis tests.
During the quarter, it closed its $49 million acquisition of Exalenz, and the integrated commercial team placed the first BreathID Smart System following its FDA clearance in February. BreathID products contributed more than $1 million in the quarter, Baldasare said.
Meridian Bioscience's fiscal Q3 net earnings were $27.5 million, or $.64 per share, compared to $5.1 million, or $.12 per share a year ago. On an adjusted basis, EPS was $.55, beating analyst expectations of $.23.
Meridian's Q3 R&D expenses were $6.7 million, up 46 percent from $4.6 million a year ago. Its SG&A spending was $18.7 million, up 27 percent from $14.7 million in Q3 2019.
The company finished the quarter with $63.4 million in cash and cash equivalents.
Meridian raised its guidance for fiscal year 2020, saying that net revenues are expected to range from $245 million to $250 million, up from $230 million to $236 million previously reported.
The firm anticipates its life science revenues for fiscal year 2020 will be between $127 million and $130 million, up from a previous range of between $110 million and $114 million, and diagnostics revenues are expected to be between $118 million and $120 million, down from between $120 million and $122 million.
Fiscal-year 2020 adjusted EPS is anticipated to be in the range of $1.01 to $1.05, up from a previous guidance of between $.70 and $.75.
Meridian Bioscience said that the revenue component of its guidance anticipates that its life science business will benefit from COVID-19-related demand, enabling revenues of between $12 million and $15 million in the fourth quarter. Its revenue guidance for the life science segment has a limited contribution from rapid antigen test reagents because it has only recently begun sampling the reagents, the firm said.
For diagnostics, its guidance assumes continued softness in demand, involving a 20 percent reduction in volumes year over year for Q4.
The firm said it expects that spending on clinical trials in its fiscal fourth quarter of approximately $3 million, as trial sites continue to restart.
"This guidance includes a very limited contribution to sales from our new SARS-CoV-2 antibody pairs used in rapid antigen tests," Baldasare said. "While there are dozens of customers in the validation stage, it is unclear whether any will complete their development in time to place bulk orders in the [fourth] quarter." Guidance for the diagnostics business assumes that "diagnostic testing continues to rebound but still sees headwinds [contributing to] roughly 80 percent of normal volumes," Baldasare added.
Meridian Bioscience shares were down more than 14 percent to $20.80 in Friday afternoon trading on the Nasdaq.