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Luminex's Q1 Revenues Rise 9 Percent on Jump in Royalties, Assay Sales

NEW YORK (GenomeWeb News) – Luminex reported after the close of the market Monday that its first-quarter 2013 revenues increased 9 percent, driven by a 23 percent increase in royalty revenues year over year and a jump in assay sales.

Austin, Texas-based Luminex brought in total revenues of $53.2 million for the three months ended March 31, compared to revenues of $48.7 million for the first quarter of 2012. It beat the consensus Wall Street estimate for revenues of $52 million.

Luminex's consumables sales were flat at $11.9 million, royalty revenue jumped to $10.1 million from $8.2 million, assay revenue increased 6 percent to $18.3 million from $17.3 million, and "all other" revenue was up 47 percent to $6.3 million from $4.3 million.

The jump in royalty revenue was largely due to one-time contributors, including roughly $1 million from a Merck milestone payment and biodefense grant revenue.

CEO Patrick Balthrop said in a conference call following the release of the results that the firm put in a "solid performance" in Q1 and credited growth in assay sales as a primary driver of the company's revenues.

While assay sales were up 6 percent year over year, the firm adjusted its comparison to reflect its shift to a direct sales model at the beginning of the year. Balthrop said that in anticipation of the change, the company's distributors placed large orders in the fourth quarter of 2012 that were shipped during Q1. As a result, on an adjusted basis, Luminex said its assay sales were up 15 percent.

Balthrop said the firm saw "continued momentum" in its infectious disease franchise, including "double-digit growth" in sales of its Respiratory Viral Panel, as well as contributions from its recently launched xTAG Gastrointestinal Pathogen Panel, and "strong growth" from Luminex's portfolio of laboratory-developed tests.

Though Luminex's system sales declined 6 percent year over year to $6.6 million from $7 million, CFO Harriss Currie said that the company shipped more systems year over year and noted that the decline was the result of more customers adopting its lower-cost, benchtop Magpix platform instead of its higher-throughput Luminex 200 system. Altogether, Currie said that Luminex sold 205 multiplexing systems during the quarter.

The firm posted a net loss of $2.5 million, or $.06 per share, versus net income of $3.5 million, or $.08 per share, for Q1 2012. On an adjusted basis, it had earnings per share of $.19 versus $.15, beating the consensus analysts' estimate of $.08 per share.

Luminex reported R&D expenses of $12.7 million, up 26 percent from $10.1 million. Balthrop attributed the spike in R&D costs to development of Luminex's next-generation sample-to-answer platform, an effort the company refers to as Project Aries.

The company's SG&A spending increased 53 percent to $25.8 million from $16.9 million.

Currie noted that the firm's operating expenses in the quarter included a $7.0 million charge attributable to finalizing the termination of molecular diagnostic distribution arrangements, which were related to its shift in sales strategy.

During the quarter the firm received US Food and Drug Administration clearance for the GPP to run on its 100/200 system. Subsequent to the finish of the first quarter, Luminex announced that the FDA had also cleared the GPP test to run on the Magpix instrument.

During the call, Balthrop called the Magpix clearance an "important milestone" for Luminex as it positions the firm's GPP for "market penetration, as well as additional future assay clearances."

Luminex finished the quarter with $54.3 million in cash and cash equivalents and $6.6 million in short-term investments. Currie reaffirmed the company's 2013 guidance of between $220 million and $230 million. He said that Luminex "remains cautious but optimistic about the life science research market," and is experiencing "favorable trends with respect to overall demand from our clinical customers."

In Tuesday morning trade on the Nasdaq, shares of Luminex were up 3 percent at $16.94.

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