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Luminex (LMNX) Misses on Earnings in Q2, Margins Contract

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Luminex Corporation (LMNX - Free Report) reported second-quarter 2018 earnings of 15 cents per share, missing the Zacks Consensus Estimate of 19 cents. However, the figure rose 7.1% on a year-over-year basis.

Luminex carries a Zacks Rank #2 (Buy).

Revenue in Detail

Revenues came in at $79.6 million, missing the Zacks Consensus Estimate of $80 million.

Revenues also increased 4.3% from the year-ago quarter driven by strength in the molecular diagnostic franchise.

Luminex Corporation Price, Consensus and EPS Surprise

 

Segmental Analysis

System Sales

Revenues in the segment came in at $11.8 million, up 19% from the year-ago quarter.

Consumable Sales

This segment accounted for $11 million of revenues, down 18% year over year.

Royalty Revenues

Royalty revenues came in at $11.6 million, up 7% on a year-over-year basis.

Assay Revenues

This segment posted revenues worth $40.2 million, increasing 6% on a year-over-year basis.

Service Revenues

Revenues in the segment totaled $3 million, down 9% from the year-ago quarter.

Other

Other revenues came in at $2 million, up 7% from a year ago.

Business Details

Luminex registered total sample-to-answer molecular product revenues of $14.2 million, surging 33% year over year.

The company placed 65 sample-to-answer molecular systems during the second quarter of 2018, up from 35 in the second quarter of 2017.

The company’s sample-to-answer utilization per VERIGENE customer grew 16% on a year over year basis to $108,000 in the quarter under review.

Further, utilization per ARIES customer grew 43% on a year-over-year basis to $53,000 in the quarter.

Luminex shipped 361 multiplexing analyzers in the quarter. These included MAGPIX systems, LX systems and FLEXMAP 3D systems.

Margins

Gross profit in the reported quarter was $49.3 million, down 1.5% year over year. Gross margin was 62%, which contracted 340 basis points (bps).

Operating expenses totaled $41.4 million, reflecting a drop of 2.7% on a year-over-year basis.

Research and development expenses in the quarter were $11.7 million, down 4.8% year over year.

Selling, general and administrative expenses in the quarter were $27.6 million, down 1.9% year over year.

Guidance

For 2018, Luminex reiterated its guidance.

The company expects revenues between $310 million and $316 million. The Zacks Consensus Estimate for 2018 revenues is pinned at $315.1 million, within the given range.

The company expects third-quarter revenues within $72.5-$74.5 million. Notably, the Zacks Consensus Estimate for revenues is pegged at $74.6 million for the third quarter, which is slightly above the given range.

In Conclusion

Luminex ended the second quarter on a dreary note, missing the Zacks Consensus Estimate for both the counts. The second quarter witnessed the lowest system placements. Gross margin contracted significantly, while system, consumable and service revenues declined on a year-over-year basis. A highly competitive life sciences industry adds to the woes.

However, the molecular diagnostic segment witnessed a solid quarter. The company is also poised well on the solid ARIES and VERIGENE platforms. Assay and royalty revenues also witnessed an upside. New products are likely to expand the company’s portfolio. Furthermore, a solid revenue guidance for 2018 buoys optimism. Falling operating expenses and expanding operating margins are major positives.

Earnings Results of MedTech Majors at a Glance

A few better-ranked stocks in the broader medical space, which reported solid earnings this season, are Intuitive Surgical, Inc (ISRG - Free Report) , Chemed Corporation (CHE - Free Report) and Illumina, Inc (ILMN - Free Report) .

While Intuitive Surgical and Illumina sport a Zacks Rank #1 (Strong Buy), Chemed carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical reported adjusted earnings of $2.76 per share in the second quarter of 2018, which beat the Zacks Consensus Estimate of $2.48. Adjusted earnings improved 38% year over year.

Chemed's second-quarter 2018 adjusted earnings per share was $2.81, up 30.7% from a year ago. The figure also surpassed the Zacks Consensus Estimate of $2.68.

Illumina reported adjusted earnings of $1.43 per share, beating the Zacks Consensus Estimate of $1.11.

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