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Luminex Q3 Revenues Rise 4 Percent; Verigene 2 FDA Submission Back on Track

NEW YORK (GenomeWeb) – Luminex reported after the close of the market on Monday that its third quarter revenues rose 4 percent, driven by strength in the company's sample-to-answer molecular business.

For the quarter ended Sept. 30, the molecular diagnostics company reported revenues of $74.1 million, up from $71.2 million in the year-ago quarter, and short of the average Wall Street estimate for revenues of $74.4 million.

Luminex President and CEO Homi Shamir said in a statement that momentum in the firm's sample-to-answer molecular business drove its performance in the quarter.

He said that its Verigene and Aries systems "are experiencing excellent traction in the market resulting from a combination of factors, including their ease of use, a rapidly expanding FDA-cleared test menu, differentiated pricing strategies, and a large, fully integrated sales and support team."

On a conference call with analysts to discuss Q3 results, Shamir said that a Verigene customer generates an average of $95,000 in assay revenue per year while an Aries customer generates revenue greater than $40,000 per year.

In Luminex's previous quarterly earnings call Shamir had announced a delay in taking the Luminex Verigene 2 system to clinical trials, citing the acceptance and success of its Verigene 1 assay; an objective to reduce cartridge failure rates for Verigene 2 below 5 percent prior to starting clinical trials; and uncertainty related to pricing and reimbursement for molecular panels caused by a recent non-coverage draft decision on large syndromic respiratory and gastrointestinal test panels by Palmetto GBA, a Medicare contractor.

In the call on Monday he said that Luminex has largely resolved these issues, noting that "we have done a good job in overcoming obstacles [with Verigene 2]. Our platform is working very well, and due to the ongoing success of our Verigene 1 platform, our go-to-market strategy for Verigene 2 will now focus on a multi-assay launch. We will commence multiple clinical trials in 2018, with the first trial commencing in the second quarter of 2018."

Assay revenues rose 17 percent to $37.9 million from $32.4 million; system sales fell 6 percent to $9.9 million from $10.5 million; and consumables dropped 14 percent to $10.6 million from $12.3 million.

Meanwhile, royalty revenues were down 1 percent to $11.0 million from $11.1 million; service revenues were flat year over year at $2.9 million; and other revenues fell 9 percent to $1.8 million from $2.0 million a year earlier.

Luminex added that its total sample-to-answer molecular product revenue of $11.9 million grew 55 percent compared to $7.7 million in the third quarter of 2016. The firm noted that in the quarter it placed 60 sample-to-answer molecular systems under contract, bringing the total number of active customers to more than 400. It said that it shipped 266 multiplexing analyzers during the quarter, which were a combination of Magpix systems, LX systems, and Flexmap 3D systems.

In September, Luminex agreed to continue to provide its cystic fibrosis product to LabCorp through the end of 2019, with an option to extend beyond that timeline. Shamir said the contract is worth between $10 million and $12 million per year to Luminex.

Luminex CFO Harris Currie noted on the conference call that the firm "experienced a 5 [percent] increase in Aries utilization because of the expansion of the Aries menu, [and] we continue to gain new accounts for both Verigene and Aries."

Luminex's Q3 net income grew to $17.6 million, or $.40 per share, from $2.8 million, or $.06 per share, a year earlier. On an adjusted basis, the firm reported a net income of $10.7 million, of earnings of $.25 per share, beating analyst estimates for earnings of $.10 per share.

The firm's R&D expenses for the quarter fell 16 percent to $10.7 million from $12.8 million a year earlier. SG&A costs were up slightly to $26.5 million from $26.4 million.

The company ended the quarter with $110.9 million in cash and cash equivalents.

The firm said that it expects fourth quarter 2017 revenue to be between $76 million and $78 million.

In a note on Tuesday, William Blair analyst Brian Weinstein wrote that the investment bank continues "to look for evidence Luminex is closing in on an inflection point on its two top growth rate opportunities in the [sample-to-answer] space, which we believe will be the primary determinants for stock appreciation."

In early Tuesday morning trading on the Nasdaq, Luminex shares were up more than 3 percent to $20.96.