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Meridian Bioscience Looks Beyond COVID-19 for Growth in FY22


NEW YORK – Although Meridian Bioscience has seen significant benefits from the COVID-19 pandemic, largely due to increased sales of reagents in its life sciences division, the company is preparing its business for life after the pandemic.

On a conference call to discuss the firm's fiscal fourth quarter and full-year 2021 earnings results, Meridian CEO Jack Kenny laid out the company's plans to strengthen its business with the expectation that the COVID-19 pandemic turns endemic.

While the firm's non-COVID-19 demand was affected in Q4 by pandemic headwinds, Kenny said there could be an uptick in respiratory test volume as the influenza season begins. Although he said it "remains to be seen" if the 2021-2022 respiratory season will result in infections at pre-pandemic levels, the "consensus" is that it will be a stronger respiratory season than last year.

And now that Meridian has received Emergency Use Authorization from the US Food and Drug Administration for its Revogene SARS-CoV-2 test, it expects demand for both the test and the Revogene instrument to increase.

Kenny said the installed base for Revogene at the end of the quarter was 359 instruments but noted that many customers were waiting for the SARS-CoV-2 test to launch before converting to Revogene. Meridian acquired the Revogene instrument when it purchased GenePOC in 2019.

Many of those customers are smaller hospitals or settings that have few molecular instruments and need a broader menu, Kenny said. With the COVID-19 EUA, "it can make great sense financially for us and for the customer" to convert to Revogene, and the addition is expected to return Revogene placements to around 20 instruments per month, Kenny said.

As more Revogene instruments are placed, Meridian plans to launch new assays to run on the instrument, including a respiratory panel and a gastrointestinal panel. Kenny said the firm expects both tests to enter clinical trials by the end of the fiscal year, with plans to submit the GI panel to the FDA for 510(k) clearance before the respiratory panel.

Kenny added that both tests will incorporate Meridian's own reagents to reduce costs and improve performance. The COVID-19 test, coupled with the GI and respiratory panels, will help "reignite the Revogene," Kenny said.

Beyond Revogene, Meridian is also planning to launch its Curian Campylobacter species test once it receives clearance from the FDA. The firm submitted its assay, which detects Campylobacter species C. jejuniC. coliC. upsaliensis, and C. lari in stool samples, to the agency in April.

Kenny noted that timelines for approval of non-COVID-19 tests have been delayed as the FDA continues to receive an influx of COVID-19 tests, and he declined to speculate on when the Campylobacter test could receive clearance.

Meridian also plans to launch a Clostridium difficile test for use with the Curian immunoassay instrument, although the test has moved back into development to improve its performance, and it plans to submit its ciguatoxin assay, which is currently undergoing clinical trials, for 510(k) clearance by the end of the fiscal year, Kenny said.

"With the addition of these three assays we believe we will have a comprehensive, market-leading gastrointestinal assay menu," he said.

Meridian has also invested in breath testing for Helicobacter pylori with its acquisitions of Exalenz Bioscience and the North American BreathTek business from Otsuka America Pharmaceutical. Kenny said the firm is working on product enhancements that will reduce manufacturing costs of the Exalenz BreathID test, as well as feature enhancements requested by customers.

The firm said BreathTek is expected to add more than $20 million in revenues annually, and Kenny said the firm is working on integrating its operations, the bulk of which will be completed in the first half of FY22.

He added that Meridian's strongest portfolio products are its H. pylori tests, as it has tests for stool and breath for the bacteria.

Kenny noted that approximately 25 percent of testing for H. pylori in the US is done with serology tests, although that method of testing for the condition is not clinically recommended, and that Meridian's solutions can encourage a shift away from serology. In addition, approximately two-thirds of this testing is done at national reference labs, so Meridian's solutions provide an opportunity to decentralize testing to more hospital labs, Kenny said.

Meanwhile, the company's life sciences division has relied heavily on COVID-19-related products during the past two years, resulting in significant revenue increases. More than 100 customers are using Meridian's products in respiratory or COVID-19 tests, leading the company to anticipate recurring orders, but the size of those orders going forward "depends on the progression of the disease of COVID as it goes more towards [being] endemic," Kenny said.

There's "still a good amount of activity with regard to COVID," and going into the respiratory season, the firm believes its life sciences revenues will be bigger in the first half of fiscal 2022, with declines in the second half of next year, Kenny said.

Going into the respiratory and influenza season, "it'd be silly to think we're not going to have some kind of return of COVID during that window of time," Kenny said.

Meridian has also seen progress on the non-COVID-19 front, and Kenny said that in FY19, the last fiscal year before the pandemic began, only seven of its in vitro diagnostics customers generated sales greater than $1 million, approximately 30 percent of total life science revenue. In FY21, the company had 40 customers generating sales of $1 million or more, approximately 75 percent of total life science revenue, and 95 percent of those top customers use Meridian's reagents in at least one non-COVID-19 test.

That "highly diversified customer base" is embedded beyond COVID-19 and will provide a continuing revenue stream, according to Kenny who added that there's a focus within the life sciences segment on growing relationship with largest customers and meeting their supply demands.

In addition, the life sciences team at Meridian plans to expand its sample-specific reagent mixes to its lyo-ready and isothermal amplification formats, incorporate a new reverse transcriptase enzyme into its master mixes, and make its products more environmentally friendly, Kenny said.

As the COVID-19 pandemic slows down, Kenny said Meridian has been picking up new business not related to COVID-19 and is establishing a "new post-pandemic base from which we expect continued growth."