This story has been updated with information from the company's earnings call.
NEW YORK – Meridian Bioscience reported on Friday morning a 14 percent year-over-year increase in its fiscal second quarter revenues, driven largely by a 33 percent increase in its life science business.
For the three months ended March 31, the Cincinnati-based company's revenues increased to $57.3 million from $50.2 million a year ago, beating analysts' consensus estimate of $49.3 million. The increase is in line with the preliminary revenues the firm announced last month.
Revenues from the company's life science division were up 33 percent year-over-year at a record $22.4 million, from $16.7 million a year ago. Revenues for Meridian's diagnostics segment rose 4 percent to $34.9 million from $33.5 million, the first year-over-year growth in the division in the past five quarters.
Within diagnostics, molecular assays revenues were up 2 percent to $7.2 million from approximately $7.1 million. Immunoassay and blood chemistry assays revenues grew 5 percent to $27.7 million from $26.4 million. The largest contributor within diagnostics was gastrointestinal assays, which had revenues of $14.0 million.
The company also placed 35 Revogene molecular instruments during the quarter, with a total installed base of 148 instruments, Meridian said in its 10-Q form filed with the US Securities and Exchange Commission. The Revogene respiratory panel is being revised to include a SARS-CoV-2 viral target, in addition to the current influenza and other respiratory illness targets, CEO Jack Kenny said on a conference call to discuss the financial results. Meridian plans to seek Emergency Use Authorization from the US Food and Drug Administration for the revised panel late in the summer, in time for the next respiratory illness season, and expects to follow up EUA with a 510(k) submission.
CFO Bryan Balsare noted that the company benefited from increased demand for respiratory tests toward the end of the quarter due to patients testing negative for SARS-CoV-2 searching for another potential diagnosis. However, there was reduced demand for non-urgent testing, including gastrointestinal assays and blood chemistry.
Revenues for the life science segment included $5.6 million from SARS-CoV-2 related products, the company said. Revenues from molecular reagents were $11.5 million, up more than twofold from $5.4 million a year ago, and revenues from immunological reagents were $10.8 million, a 5 percent decrease from $11.4 million in Q2 2019.
Meridian partnered with Syntron Bioresearch to distribute that firm's QuikPacII COVID-19 test, which detects IgG and IgM antibodies, and expects to begin shipments later this month, Kenny said. The firm spoke to multiple different companies that make serology tests and chose Syntron's because the "performance of that test was believable," he added.
Meridian's net earnings in the quarter increased to $9.4 million, or $.22 a share, from $7.1 million, or $.17 a share. Adjusted EPS was $.23, well above the consensus Wall Street estimate of $.08 per share.
The firm's research and development spending increased 42 percent to $5.4 million from $3.8 million a year ago, while SG&A costs increased approximately 19 percent, to $17 million from $14.3 million. The increased investment in R&D will start to pay off about a year from now, with new products likely hitting the market next year, Kenny said.
The company finished the quarter with cash and cash equivalents totaling $49.6 million.
Meridian raised its guidance for fiscal year 2020, saying that net revenues are expected to range from $230 million to $236 million, with life science revenues between $110 million and $114 million and diagnostics revenues between $120 million and $122 million. Non-GAAP EPS is anticipated to be in the range of $.70 to $.75. Balsare said Meridian expected sales related to SARS-CoV-2 to be between $43 million and $47 million, peaking in the fiscal third quarter.
The guidance increase is due to expected SARS-CoV-2-related demand for the company's molecular reagents used in PCR-based tests and immunological reagents used in serology tests, which will offset a likely reduction in diagnostic test volumes. The company's reagents are being used in more than 35 SARS-CoV-2 assays, Kenny said.
Contributions from the company's $49 million acquisition of Exalenz Bioscience, which closed last month, is expected to partially offset the decrease in diagnostics volume. Exalenz's BreathID system offers breath urea testing for H. pylori, and with the acquisition Meridian is now the only US company offering both stool testing and breath testing for diagnosing active infection, Kenny said.
Meridian added that spending on clinical trials will likely be lower through the rest of the year, since the COVID-19 pandemic has paused most clinical trial sites.
In late Friday morning trading on the Nasdaq, shares of Meridian were up 4 percent to $17.05.