Luminex Beats on Assay Boost

Luminex Corporation (LMNX - Analyst Report), a developer of biological testing technologies, reported fourth-quarter fiscal 2011 adjusted earnings of 11 cents a share, outpacing both the Zacks Consensus Estimate and the year-ago earnings of 7 cents a share. The adjusted earnings exclude costs associated with the company’s acquisition of EraGen Biosciences.

Profit rose 7.6% year over year to $3.4 million (or 8 cents a share) as the Texas-based company saw double-digit growth in its top line, backed by a lower tax.

For the full year, adjusted earnings of 45 cents a share topped the Zacks Consensus Estimate of 34 cents and exceeded the year-ago earnings of 12 cents per share. Profit (as reported) skyrocketed nearly three-fold year over year to $14.5 million (or 34 cents a share).

Revenue and Margins

Revenues for the quarter soared 16% year over year to $47.9 million, just beating the Zacks Consensus Estimate of $47 million. Sales were boosted by robust growth in assay revenues. For the fiscal, sales surged 30% year over year to $184.3 million, also beating the Zacks Consensus Estimate of $183 million.

Assay sales ballooned 77% to $16.4 million, powered by the cystic fibrosis and respiratory viral panel businesses. The growth was also fueled by the contributions of EraGen Biosciences which Luminex bought in June 2011.

System sales nudged up 1% year over year to $10.4 million. Luminex shipped 307 multiplexing analyzers (including 114 MAGPIX systems) in the fourth quarter, resulting in total life-to-date shipments of 8,678 analyzers, up nearly 13% year over year.

The company’s Consumable business was the weak spot in the quarter with sales dipping 16% to roughly $10.1 million. Royalty revenues jumped 17% to roughly $7.1 million.

Gross margin, as reported, fell to 67.9% from 69.4% a year ago, impacted by charges associated with the EraGen acquisition. Operating expenses climbed roughly 22% year over year to $28.6 million with operating margin dropping to 8.2% from 12.3% a year ago.

Balance Sheet

Luminex exited the fiscal with cash and cash equivalents of $58.3 million, down roughly 35% year over year, with total long-term debt of $3.6 million (down 15% year over year).

Guidance

Moving ahead, Luminex expects revenues for fiscal 2012 in a range of $205 million to $215 million, an 11%-17% year-over-year growth. The current Zacks Consensus Estimate is $209 million.

Luminex possesses an extensive product portfolio and a healthy pipeline of novel assays, which are expected to support growth going ahead. The company launched its xTAG Gastrointestinal Pathogen Panel (“GPP”) molecular test in Europe following the CE mark approval in May 2011. Moreover, Luminex, in July 2011, received the U.S. approval for its xTAG Respiratory Viral Panel (“RVP”) Fast assay.

However, Luminex operates in a highly competitive life sciences industry. The company competes with Affymetrix (AFFX - Analyst Report) and Sequenom (SQNM - Snapshot Report), among others. Moreover, sluggish growth in its core markets is a challenge faced by Luminex. We are currently Neutral on the stock, which is backed by a short-term Zacks #3 Rank (Hold).