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Luminex Q4 Revenues Up 8 Percent Driven by Assay Sales

NEW YORK (GenomeWeb) – Luminex reported after the close of the market Monday that its fourth quarter revenues rose 8 percent year over year, in line with preliminary estimates.

For the three months ended Dec. 31, 2017, the firm reported revenues rose to $78.2 million from $72.3 million a year ago, beating the analysts' consensus estimate of $77.0 million.

The overall Q4 revenue increase was largely due to a 14 percent jump in assay sales to $41.8 million from $36.7 million a year ago. Q4 systems revenues rose 8 percent year over year to $10.3 million from $9.6 million, while consumables revenues were down 10 percent to $10.0 million from $11.1 million. Royalty revenues grew 12 percent to $11.3 million from $10.2 million, while all other revenues rose 2 percent to $1.82 million from $1.78 million.

Luminex said that its MDx sample-to-answer portfolio grew 31 percent over the prior-year quarter and generated $12.9 million compared to $9.8 million in Q4 2016. It placed 88 sample-to-answer molecular systems under contract, bringing the total number of active customers to more than 425.

The firm said that 288 multiplexing analyzers were shipped during the quarter, a combination of Magpix systems, LX systems, and Flexmap 3D systems.

The firm noted that in the quarter it received US Food and Drug Administration clearance for the Aries Group A Strep assay, the sixth assay the FDA has cleared for use on the Aries system in the past 24 months.

"Management's focus on the expansion of our molecular business is paying off as our sample-to-answer offerings, Verigene and Aries, are experiencing rapid market adoption," Homi Shamir, president and CEO of Luminex, said in a statement.

On a conference call, Shamir said that the firm's performance was driven mainly by its molecular diagnostics franchise. In the fourth quarter, the firm "delivered more than 40 percent growth in [its] sample-to-answer molecular testing businesses," he said.

He added that the firm's molecular portfolio will soon include its next-generation Verigene 2 system, and a clinical trial for the system with a gastrointestinal panel will likely begin before the end of Q2 in preparation for a submission for possible FDA clearance.

He noted that "additional clinical studies on Verigene and other molecular platforms will follow in 2018 and beyond."

Shamir also said that the firm expects to launch a next-generation xMAP multiplexing platform in 2019.

The firm posted a net loss for the quarter of $3.0 million, or a loss of $.07 per share, compared to a net loss of $3.4 million, or a loss of $.08 per share, for Q4 2016. Luminex said that its net loss was driven by "necessary adjustments to expected company tax obligations and deferred tax assets and liabilities" related to the passage of new US tax legislation.

Luminex reported adjusted EPS of $.20, beating the consensus Wall Street estimate of $.09 per share.

The company's R&D spending fell 21 percent during the quarter to $10.4 million from $13.3 million in the year-ago period. Its Q4 SG&A expenses were essentially flat at $28.7 million in the recently completed quarter, compared to $28.6 million in Q4 2016.

For the full year 2017, Luminex reported revenues rose 13 percent to $306.6 million from $270.6 million in 2016, and above the average Wall Street estimate of $305.3 million.

The firm reported that systems revenues in 2017 were up 3 percent year over year to $38.7 million from $37.4 million, while consumables revenues were up 1 percent to $49.3 million from $48.6 million. Its royalty revenues grew 1 percent to $44.7 million from $44.0 million, while assay revenues climbed 27 percent to $154.9 million from $122.1 million. All other revenues fell 2 percent to $7.5 million from $7.7 million in 2016.

Luminex reported net income for the year of $29.4 million, or $.67 per share, compared to $13.8 million, or $.32 per share, for 2016. It reported an adjusted EPS for 2017 of $.68 per share. The consensus Wall Street estimate was for $.84 per share.

R&D expenses for the year fell 6 percent to $45.7 million from $48.7 million in 2016. SG&A expenses rose 7 percent to $107.3 million in 2016 from $99.5 million in 2016.

Luminex ended the year with $127.1 million in cash and cash equivalents.

For the first quarter of 2018, the company anticipates revenues of $79 million to $81 million, and anticipates revenues of $310 million to $316 million for the full year. Analysts, on average, expect revenues of $80.8 million for Q1 and $310.1 million for 2018.

Luminex CFO Harris Currie said that in 2018, he expects that the firm's molecular sample-to-answer solutions franchise will grow "at a high rate approaching 50 percent" and will put the company in a position to achieve a goal of exiting 2019 on a "$100 million per year run rate" [for that product line].

However, he noted that the firm's non-automated solutions business is expected to contract during 2018 by "a little over 10 percent" because of the anticipated loss of NuSwab testing business from its customer LabCorp.

He said that in 2018, the firm's expected effective tax rate will be in the mid-to-high 20s.

Piper Jaffray research analyst William Quirk said in a research note Monday that the investment bank views "2018 as a building year for Luminex with the company developing a more competitive multiplex instrument and the LabCorp assay discontinuation [impacting] 2018 reported growth." He noted that a Palmetto draft coverage decision for multiplex testing represents a potential headwind to Luminex, but longer term the bank "believes Verigene’s flex pricing strategy could become attractive."

In Tuesday morning trading on the Nasdaq, Luminex's shares rose more than 2 percent to $19.72.