Mixed 2Q for Luminex, Profit Dips - Analyst Blog
July 31 2012 - 8:15AM
Zacks
Luminex
Corporation (LMNX) reported second quarter 2012 adjusted
(excluding one-time charges) earnings of 7 cents per share, in line
with the Zacks Consensus Estimate but lower than the year-ago
earnings of 11 cents per share.
Profit generated was $3 million,
down 36.4% from the prior-year quarter mainly due to higher
operating expenses associated with the EraGen and GenturaDx
acquisitions.
Revenues
Revenues rose 1.3% in the reported
quarter to $48.3 million, slightly missing the Zacks Consensus
Estimate of $49 million. Overall increase in revenue was primarily
driven by solid growth in the Assay business, partially offset by
lower System and Consumable sales.
Assay sales soared 89% to $17.5
million backed by the acquisition of EraGen Biosciences, which has
been integrated into the company as Luminex Madison.
Revenues from System segment
dropped 8% year over year to $8.4 million. The company shipped 278
multiplexing analyzers (including 167 MAGPIX systems) in the
quarter, resulting in total life-to-date despatches of 9,162
analyzers, up 12% year over year.
Consumable sales plummeted 41% to
$10.8 million due to tough year-over-year comparison. Royalty and
All Other revenues grew 4% and 12% to $7.7 million and $3.9
million, respectively.
Margins
Gross margin in second quarter 2012
was 71%, flat year over year. Operating expenses were up 11.6% to
$27.9 million, due to costs associated with the Luminex Madison and
the GenturaDx acquisitions. Operating margin fell to 13.4% from
18.5% in the prior-year quarter.
Selling, general and administrative
expenses (as a percentage of sales) were higher at 35.6% versus
34.6% in the prior-year quarter. Research and Development expenses
were 20% compared with 16.7% in the year-ago quarter.
Balance Sheet
Luminex ended second quarter 2012
with cash and cash equivalents (including short-term investments)
of $99 million, up 15.7% year over year. Long-term debt was $2.2
million, down 29.8%.
Guidance
The company reiterated its revenue
forecast in a range of $205 million – $215 million.
Recent
Developments
Luminex recently announced a
definitive deal to buy U.S.-based diagnostic testing company,
GenturaDx. Per the agreement, Luminex will buy all the outstanding
shares of the privately-owned company for $50 million in cash,
subject to certain terms and conditions. In addition to $50
million, Luminex may end up making contingent payments based on the
achievement of certain milestones and also on the basis of product
performance.
The GenturaDx deal is in line with
Luminex’s strategy of pursuing acquisitions to drive growth.
Luminex also possesses an extensive product portfolio and a healthy
pipeline of novel assays, which are expected to support growth
going ahead. The company submitted a de-novo 510(k) application to
the U.S. Food and Drug Administration ("FDA") for its
gastrointestinal pathogen panel ("xTAG GPP") assay.
In the quarter, the company was
added to the S&P SmallCap 600 GICS (Global Industry
Classification Standard) Life Sciences Tools & Services
Sub-Industry Index.
However, Luminex operates in a
highly competitive life sciences industry. The company competes
with Affymetrix (AFFX), Life
Technologies (LIFE) and Sequenom (SQNM),
among others. Moreover, sluggish growth in its core markets is a
challenge faced by Luminex. We are currently Neutral on the stock,
which carries a short-term Zacks #4 Rank (Sell).
AFFYMETRIX INC (AFFX): Free Stock Analysis Report
LIFE TECHNOLOGS (LIFE): Free Stock Analysis Report
LUMINEX CORP (LMNX): Free Stock Analysis Report
SEQUENOM INC (SQNM): Free Stock Analysis Report
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