Immucor: Record Revenues

Immucor (BLUD) reported net income of $19.4 million, or $0.27 per diluted share, for the fourth quarter of FY 2009, compared to $18.3 million, or $0.26 per diluted share, a year ago. Revenues grew 15.2% to $79.0 million on higher price and volume. Revenues include a negative forex impact of around $3 million y-o-y. 

Gross margin contracted to 69.9% from 72.0%, mainly due to $1.8 million of expense incurred on the Quality Process Improvement Project. Operating expenses grew 22.9% to $26.1 million, primarily resulting from the takeover of BioArray and direct marketing initiatives in France and United Kingdom. R&D grew 117.9% to $3.1 million (4.0% of revenues) and SGA grew 11.1% to $21.9 million (27.6% of revenues). 

Reagents revenues grew 14.8% to $69.2 million – Traditional Reagents contributed $52.1 million (up 15.2%) and Capture Reagents contributed $17.1 million (up 13.5%). Instruments revenues totaled $9.1 million – up 9.0% y-o-y. 

For the FY 2009 ended May 31, 2009, net income was $76.2 million, or $1.07 per diluted share, compared to $71.5 million, or $1.00 per diluted share, a year ago. Revenues grew 15.1% to $300.5 million. Gross margin expanded to 71.9% from 71.0%. 

Operating expenses grew 27.4% to $99.1 million on higher R&D and SGA. R&D grew 65.8% to $10.7 million (3.6% of revenues) and SGA grew 20.4% to $84.6 million (28.2% of revenues). About $2.4 million was spent on the Quality Process Improvement Project in FY 2009. Immucor’s FY 2009 financials include last 10 months’ performance of BioArray, which was acquired on August last year. 

Immucor expects diluted earnings per share of $1.10-$1.17 on revenues of $322-$332 million in FY 2010. It estimates gross margin to be in the range of 70.0%-71.5%. Around $4.0-$4.5 million is anticipated to be spent on the Quality Process Improvement Project during the next fiscal. 

Immucor continues to develop new instruments. Acceptance of Echo instrument by the small- to medium-sized hospital has been notable. Immucor received more than 600 orders for Echo within first two years of its launch – which roughly represents 10% of the addressable global market estimated by the company. 

Immucor plans to launch the Galileo Neo, the fourth generation automated instrument targeted at high volume customers, in early 2010. Moreover, the acquisition of BioArray will enable the company to provide molecular diagnostic systems for specialty transfusion applications. 

Immucor reported record revenues and earnings in FY 2009, defying the ongoing global downturn that led to constrained capital spending by healthcare providers globally. However, the notice of intent to revoke the biologics manufacturing license for its Reagent Red Blood Cells and Anti-E (Monoclonal) Blood Grouping Reagent product, which Immucor received from the FDA last month, remains a concern. 

Immucor has already submitted the preliminary response to the FDA earlier this month. Next month it will present a detailed remediation plan and timelines to the FDA. We continue to maintain our Hold recommendation for the company.

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