Mixed 1Q for Luminex, Profits Down - Analyst Blog

Diagnostic testing technologies company, Luminex Corporation (LMNX) reported first quarter fiscal 2012 adjusted (excluding one-time charges other than stock based compensation expense) earnings of 8 cents per share, in line with the Zacks Consensus Estimate. The company’s year-ago earnings were 11 cents per share. Profit generated was $3.5 million, down 20.9% from the prior-year quarter.

Revenues

Revenues rose 13% in the reported quarter to $48.7 million, narrowly beating the Zacks Consensus Estimate of $48 million. Overall increase in revenue was driven by solid growth in the Assay business and also double-digit sales growth across Royalty and All Other segments. This was, however, partially offset by lower System and Consumable sales.

Assay sales soared 80% to $17.3 million backed by higher sales of Gastrointestinal Pathogen Panel (GPP), the Cystic Fibrosis and the Luminex Madison businesses.

Revenues from System segment dropped 9% year over year to $7 million. The company shipped 206 multiplexing analyzers (including 55 MAGPIX systems) in the quarter, resulting in total life-to-date despatches of 8,884 analyzers, up 12% year over year.

Consumable sales dipped 21% to $11.9 million due to tough year-over-year comparison. Royalty and All Other revenues grew 14% each to $8.2 million and $4.3 million, respectively.

Margins

Gross margin in the first quarter 2012 was 69% versus 71% in the year-ago quarter. Operating expenses were $28.2 million (up 25.5%), which includes the Luminex Madison acquisition worth $2.1 million. Operating margin fell to 11.5% from 19.2% in the prior-year quarter.

Selling, general and administrative expenses (as a percentage of sales) were higher at 36.1% versus 33% in the prior-year quarter. Research and Development expenses were 19.4% compared with 17.5% in the year-ago quarter.

Balance Sheet

Luminex ended first quarter 2012 with cash and cash equivalents of $51.8 million, down 45.2% year over year. Long-term debt was $2.4 million, down 26.2%.

Guidance 

The company reiterated its revenue forecast in the range of $205 million – $215 million.

Luminex possesses an extensive product portfolio and a healthy pipeline of novel assays, which are expected to support growth going ahead. Luminex recently extended its agreement with Bio-Rad Laboratories, Inc. (BIO). Per the agreement, Bio-Rad has been given the rights to promote and sell Luminex’s MAGPIX analyzer system till 2023. Also, the company received CE Mark approval for its NeoPlex4 assay and NeoPlex System offerings.

However, Luminex operates in a highly competitive life sciences industry. The company competes with Affymetrix (AFFX) and Sequenom (SQNM), among others. Moreover, sluggish growth in its core markets is a challenge faced by Luminex. We are currently Neutral on the stock, which is backed by a short-term Zacks #3 Rank (Hold).

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