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Meridian Bioscience Prelim Fiscal Q2 Revenues Fall Short of Expectations; Firm Lowers 2019 Guidance

NEW YORK (GenomeWeb) – Meridian Bioscience announced today that its preliminary fiscal second quarter revenues are expected to be down nearly 12 percent year over year driven by a decline in revenues in its diagnostics segment.

For fiscal Q2 2019, the company said that revenues are anticipated to be approximately $50.0 million compared to $56.5 million a year ago. The analysts' average estimate is $56.4 million.

The decline is due to a 14 to 16 percent year-over-year drop in sales in the diagnostics segment, the company said in a statement, adding that the decline is expected to be partially offset by organizational streamlining efforts initiated in 2018.

"Revenue growth in both of our business units has been more challenging than we expected this year," said CEO Jack Kenny in a statement.

Specifically, within diagnostics Meridian said revenues for molecular platform products in the quarter are anticipated to be down nearly 30 percent from the second fiscal quarter of 2018 as a result of increasing competitive pressures, and revenues for respiratory assays are expected to be down approximately 20 percent from the second fiscal quarter of 2018.

"The weaker demand for respiratory assays was impacted by a lighter flu season compared to a year ago," the firm said, also noting that its H. pylori product revenues were consistent with expectations but continued to reflect price reductions implemented at the end of fiscal 2018.

Meanwhile, revenues for the life science business segment reflected "inconsistent ordering patterns" for in vitro diagnostic customers in China that continued from the fiscal first quarter. "The conversion of sample and validation sales into higher volume bulk orders in China has been lower than expected, and there is increasing evidence of heightened competition from local suppliers," the firm said.

The company also provided an update on its Magellan lead testing business, noting that the US Food and Drug Administration has put an "Additional Information" hold on its submission to reinstate the venous blood sample type testing applications, and has also informed Magellan that it has commissioned a third-party study of the LeadCare test for capillary blood samples.

Meridian expects competitive pressures and uncertain demand in China to persist, and therefore, the company is now guiding a net revenue decrease of 3 percent to 6 percent and non-GAAP earnings per share of $0.60 to $0.65 for the fiscal year ending September 30, 2019, with a mid- to high-single digit decline in diagnostics revenues and low- to mid-single digit growth in life science revenues. Meridian had previously provided 2019 guidance of 2 percent growth in consolidated net revenues, and non-GAAP EPS of $.74 to $76.

"We will continue to work to streamline and improve the operations, while maintaining and investing in the business in ways that are expected to positively address our competitive weaknesses and yield future growth," Kenny said. The firm also plans to continue to implement near-term commercial and product initiatives to help offset pressures, he added.

Meridian's shares on the Nasdaq were down about 15 percent to $14.91 in early morning trading.