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Meridian Q1 Revenues Up 12 Percent

NEW YORK (GenomeWeb) – Meridian Bioscience today reported its first quarter revenues rose 12 percent, with growth in both its life sciences and diagnostics businesses somewhat offset by losses in its Magellan lead testing unit.

For the three months ended Dec. 31, 2017, revenues increased to $52.3 million from $46.8 million a year ago, beating Wall Street analysts' average estimate of $49.0 million.

Revenues from the firm's diagnostics business were up 11 percent to $37.5 million from $33.8 million in the prior year. Meridian's life science business revenues rose 14 percent to $14.8 million from $13.0 million in the year-ago period. 

The firm reported growth in its core diagnostics business of 17 percent, but a 20 percent decline in its Magellan business, an independent business unit of Meridian Bioscience. In core diagnostics, the firm attributed its growth to a strong respiratory season and double-digit growth in its foodborne and H. pylori products. C. difficile revenues were stable at approximately $5 million per quarter, the firm added.

The Magellan business unit was affected by reduced test volumes on LeadCare systems using venous blood and by a difficult comparison to a year ago due to a large, non-repeating international order, the firm said. Meridian acquired Magellan in 2016 but test kits using venous blood were recalled last year, with the US Food and Drug Administration noting modified versions of the tests were sold without approval. Magellan also failed to submit medical device reports to the agency after becoming aware of customer complaints involving test results discrepancies.

Meridian is continuing to work with the FDA regarding the use of venous blood with Magellan’s LeadCare testing systems. "We anticipate a rebound in the Magellan business in the second quarter and a return to growth for the quarter," Meridian CEO Jack Kenny said in a statement. "We remain committed to strengthening Magellan's quality system and ensuring that all aspects of the system are in full compliance. We take this issue very seriously and are continuing to progress with the highest sense of urgency." 

Meridian's life science unit revenue gains were attributed to double-digit growth in the firm's immunoassay components and reagents unit and in its molecular components unit. The firm also noted that investments in the Asia-Pacific markets continue to perform well, with revenues in China growing approximately 115 percent year-over-year.

Net earnings for the quarter were flat at $6.3 million, or $.15 per share, in line with analyst estimates for EPS of $.15. 

The firm's R&D spending during the quarter increased 25 percent to $4.5 million from $3.6 million a year ago. Its Q1 SG&A expenses rose 16 percent to $17.7 million from $15.3 million year over year, and included $1.5 million in CEO transition and litigation costs.

During the quarter, Meridian made progress on the development of its Curian immunoassay platform which leverages optical and fluorescent technologies, and the firm anticipates launching the platform and initial assays in early 2019. Its molecular test for cytomegalovirus in newborns, the illumigene CMV, is targeted to launch later this year. Meridian also expects to enter clinical trials near the end of calendar 2018 for an H. pylori/Clarithromycin resistance assay.

"We remain confident that we are deploying our investments towards products and platforms that will not only grow Meridian's top and bottom line as we move beyond fiscal 2018, but importantly, serve to improve patient outcomes," Kenny said.

Meridian finished the quarter with $54.7 million in cash and cash equivalents. 

For fiscal 2018, the company expects net revenues to be in the range of $207 million to $212 million and earnings to be between $.59 and $.62 per share. On an adjusted basis, the firm is expecting earnings of $.65 to $.68 per share. Analysts are expecting revenues of $207.1 million and earnings of $.66 per share for the year.

Meridian's shares were up nearly 6 percent to $15.65 in morning trading on the Nasdaq.