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Despite 12 Percent Drop in Q1 Sales, Meridian Bioscience Maintains Positive FY '11 Outlook

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Meridian Bioscience said today that despite a 12 percent overall drop in first-quarter revenues, it is maintaining a positive outlook for fiscal year 2011 based in part on the gradual uptake of its Illumigene amplification-based C. difficile test and positive contributions from its recently acquired Bioline business.

For its first fiscal quarter ended Dec. 31, 2010, the Cincinnati, Ohio-based diagnostics and reagents firm logged $37.3 million in sales, a 12 percent drop from $42.5 million in revenues in the same period last year. Meridian also reported first-quarter net earnings of $6 million, a decrease of 32 percent from $8.9 million in fiscal 2010 Q1.

Meridian blamed the revenue drop primarily on its US Diagnostics business segment, which saw its net sales fall to $22.6 million in Q1 from $30.7 million in the year-ago period. More specifically, the company saw heavy demand in fiscal 2010 Q1 for its swine flu immunoassay tests, which tailed off drastically in Q1 2011.

Despite this setback, Meridian said that it was maintaining full-year 2011 guidance set forth in September of between $165 million and $170 million in net sales, which would be comparable to the company's full-year sales in fiscal year 2010.

Part of the reason for this confidence is the fact that the company has slowly but surely replaced its traditional immunoassay-based diagnostic tests for C. difficile with molecular tests using the Illumigene technology. Illumigene C. difficile amplifies DNA using loop amplification technology and provides results in less than one hour, and received regulatory clearance from the US Food and Drug Administration last July.

"We achieved stability in our C. difficile category with Illumigene revenues almost entirely offsetting declines from our traditional immunoassay tests," CEO John Kraeutler said in a statement. "Illumigene is still in the early phases of launch; however, I am pleased to say that we have approximately 200 customers thus far, an increase from 125 in early November. Recently, we initiated a series of workshops in the US and expanded our distribution capabilities for this new technology."

In addition, Meridian said that it had a "robust follow-on" pipeline for Illumigene, including tests for Group B Streptococcus, although it did not provide a potential timeline for development of this test.

Meridian also said that for fiscal 2011 Q1, revenues for its Life Science segment increased 58 percent to $8.7 million from $5.5 million in the year-ago period, primarily due to "strong sales" from Bioline, which the company acquired in July for its PCR reagents portfolio (PCR Insider, 7/22/2010).

"We are very pleased with the performance of Bioline thus far," Kraeutler said. "New product sales from the MyTaq and SensiFast reagents look very promising and are expected to lead Bioline to outperform expectations."

Kraeutler added that the company expects Bioline to contribute profits in the second half of the year "after certain purchase accounting adjustments related to inventory are behind us."

He said that lighter production resulted in "unfavorable manufacturing variances" in the company's Tennessee facility that negatively impacted the quarter. "This will be remedied in the subsequent quarters as revenues and production increase. Overall, we expect Life Science to perform well."

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