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Luminex Q4 Revenues Rise 4 Percent, Shares Down on EPS Miss

NEW YORK (GenomeWeb) – Luminex reported after the close of the market on Monday that its fourth quarter revenues rose 4 percent year over year, in line with preliminary estimates.

For the three months ended Dec. 31, 2018, the firm said revenues rose to $81.1 million from $78.2 million a year ago, beating the analysts' consensus estimate of $79.4 million.

In Q4, Luminex reported adjusted earnings per share of $.04 and missed the consensus Wall Street estimate of $.09 per share, startling some investors. In early morning trading Tuesday on the Nasdaq, Luminex shares were down more than 11 percent at $24.97.

Excluding a loss of business to Laboratory Corporation of America, total revenue increased 22 percent year over year in the fourth quarter, Luminex said.

The firm's Q4 system revenues were $10.2 million, down 1 percent year over year from $10.3 million. Consumable revenues were $15.7 million, an increase of 57 percent year over year from $10.0 million. Luminex posted $13.5 million in royalty revenues, up 19 percent from $11.3 million in the prior-year quarter. Assay revenues were $37 million, a drop of 11 percent from $41.8 million in the prior-year quarter. Service revenues were $3.2 million, up 10 percent from $2.9 million year over year, and other revenues were $1.6 million, a decrease of 14 percent from $1.8 million in the prior-year quarter. 

Luminex said it placed 60 sample-to-answer molecular systems under contract during the fourth quarter of 2018. Active sample-to-answer customers are now nearing 600.

Sample-to-answer utilization per Verigene customer grew about 10 percent to over $109,000 from $100,000 in the prior-year quarter. Utilization per Aries customer grew about 14 percent to about $53,000 from $47,000 in the prior-year quarter.

The firm said that it shipped 268 multiplexing analyzers during the quarter — a combination of Magpix systems, LX systems, and Flexmap 3D systems.

Homi Shamir, the firm's president and CEO, said in a statement that the firm expects 2019 to be a transitional year while it adjusts to the departure of LabCorp and the integration of EMD Millipore’s flow cytometry business, which Luminex acquired for $69.9 million in cash and about $5.1 million in committed inventory purchases. The deal closed on Dec. 31, 2018.

"We will continue to build Luminex, both organically and through targeted acquisitions, to be a meaningful presence in the life science marketplace," Shamir said, adding that the firm expects to return to double-digit revenue growth by 2020.

On a conference call to discuss the company's financial performance, Shamir said that adjusting for losses of about $30 million of LabCorp revenue in 2018, its total revenue grew by almost double-digits. Further, for the full year, the firm's MDx product revenues grew by 13 percent when adjusted for LabCorp, he said. 

He noted that Verigene II development is on track and the firm anticipates launching the instrument in the second half of this year. The Luminex Sensiplex instrument in development — an update of its xMAP system — is scheduled to launch in 2020, Shamir said.

Its LTG revenue stream grew by 5 percent year over year in 2018 and 23 percent during Q4, driven by royalty growth greater than 10 percent for 2018 and double-digit growth in royalties and consumable revenues in Q4.

Shamir said that he anticipates that the MilliporeSigma flow cytometry business will be accretive by the end of this year. 

The firm's net loss in Q4 narrowed to $2.3 million, or $.05 per share, compared to a net loss of $3.0 million, or $.07 per share, for Q4 2017. The firm said that its net loss in the recently completed quarter was primarily driven by the departure of LabCorp Women’s Health and costs associated with the closing of the transaction with MilliporeSigma.

The company's R&D spending rose 27 percent during the quarter to $13.2 million from $10.4 million in the year-ago period. Its Q4 SG&A expenses rose 11 percent to $32.0 million in the recently completed quarter from $28.7 million in Q4 2017.

For the full year 2018, Luminex reported revenues rose 3 percent to $315.8 million from $306.6 million in 2017, and above the average Wall Street estimate of $313.6 million.

For full-year 2018, the firm's system revenues were $40 million, up 3 percent year over year from $38.7 million. Consumable revenues were $50.1 million, an increase of 2 percent year over year from $49.3 million. Luminex posted $49.4 million in royalty revenues, up 11 percent from $44.7 million in the prior year. Assay revenues were $156.7 million, an increase of 1 percent from $154.9 million in the prior year. Service revenues were $12.2 million, up 6 percent year over year from $11.5 million. Other revenues were $7.4 million, a decrease of 1 percent from $7.5 million in the prior year.

Luminex reported net income for the year of $18.5 million, or $.41 per share, compared to $29.4 million, or $.67 per share, for 2017. It reported an adjusted EPS for 2018 of $.48 per share, missing the consensus Wall Street estimate of $.54 per share.

Its R&D expenses for the year rose 3 percent to $47.2 million from $45.7 million in 2017. Its SG&A expenses rose 4 percent to $111.8 million in 2018 from $107.3 million in 2017.

Luminex ended the year with $76.4 million in cash and cash equivalents.

For the first quarter of 2019, the company anticipates revenues of $82 million to $84 million, and for full-year 2019, it anticipates revenues of $337 million to $343 million.

In a research note on Monday, JP Morgan analyst Tycho Peterson said that Luminex's management "continues to believe that stricter panel reimbursement in outpatient syndromic testing" tied to a Palmetto final local coverage determination "will further help its platform, given its competitive flex pricing scheme."