Luminex, a developer of molecular diagnostics and clinical tools for the life sciences industry, returned to profit this quarter – well ahead of schedule – after a major client, LabCorp, departed in 2019.
Luminex, a developer of molecular diagnostics and clinical tools for the life sciences industry, returned to profit this quarter – well ahead of schedule – after a major client, LabCorp, departed in 2019.
The quick return to profitability is partially the result of the increase in orders for equipment and assays related to the COVID-19 pandemic, as well as the responsiveness of the company and the FDA as solutions gained emergency use authorization well ahead of pre-COVID-19 schedules.
“Luminex is fortunate to be well-positioned for this global pandemic,” Nachum “Homi” Shamir, president & CEO of Luminex, said during an investors’ conference call Monday, while expressing sympathy for all those affected. “A number of our customers (moderate- to high-complexity labs) have announced plans to increase their capacity using our technologies, and others are purchasing our equipment to enable in-house testing rather than sending tests out to labs, thus getting results in a few hours rather than several days.”
Luminex reported Q1 revenues of $90. 4 million – a 10% increase in earnings compared to one year ago – with 56% gross margins, 2% operating margin and 1% net income. Speaking of projected 2020 year end revenues, Shamir said, “We are extremely confident Luminex will exceed the $362 million in revenues stated in the previous guidance.”
“As a result of the COVID-19 pandemic, we experienced a rapid acceleration of system placements, assay sales and revenue. We delivered a very strong first quarter, returning to profitability with significant revenue growth within our molecular diagnostics franchise,” he elaborated in a prepared statement. " With our expanded manufacturing capacity for both automated and non-automated products and a robust product pipeline, we are well-equipped to meet the evolving needs of our customers. Our ability to manage multiple projects as a team while responding to this global crisis has been nothing short of exceptional.”
Molecular diagnostics (MDx) led the rebound with revenues of $45.2 million – up 28% from Q1 2019. Within that category, revenue from its sample-to-answer machines were up 38%, at $26.3 million. Shamir attributed some of that growth to the 123 orders for the ARIES® system. Its non-automated MDx revenue was up 17%, to $18.9 million.
“Most of the MDx sales are reagent and rental agreements, not capitals sales,” Harriss T. Currie, CFO and SVP, finance and treasurer, added. Capital equipment sales constitute about 20% of MDx revenue.
Putting the MDx revenue in perspective, “We did not have SARS-CoV-2 assays available until the end of Q1,” Shamir acknowledged. Yet, in April, the company generated $20 million in cash, above its closing 2019 balance.
The MDx uptick, he explained, was because “our customers used our products to rule out everything but COVID-19.” With new, SARS-CoV-2 assays now available, he said he expects molecular diagnostics revenues to continue to grow.
To cope with the increased product demand, Luminex is working 24/7. And, Shamir said, “We are planning to increase our test manufacturing capacity from 500,000 to 800,000 assays per month by the end of June. Most of that capacity will be used for our NxTAG® products.”
Luminex’s plans remain on track to launch IntelliFlex this month. IntelliFlex offers a 96-well format for bead-based assays. “We believe it provides an ideal platform for public health screening,” Shamir said. This next generation xMAP system will provide multiplexing for the proteomic research market.
Another new product, the Verigene® II multiplex, sample-to-answer MDx platform, currently is being reviewed by the FDA. It offers sample amplification, hybridization and detection, all in one cartridge. “We expect an emergency use authorization for that in July,” Shamir said.
The company also is developing a kit for serology testing against SARS-CoV-2 antibodies. “Hopefully, we’ll be able to submit an emergency use authorization by the end of this month,” Shamir said. “We believe this new assay can bring better serology tests to the market in terms of specificity, and also sensitivity.” He noted that a New York customer already is using Luminex equipment for IgG and IgA testing on a public health scale.
The downside, in terms of revenues, was the flow cytometry business. It experienced a significant, 42% decline from Q1 2019, which dropped revenue to $6.5 million.
COVID-19 is the reason for the precipitous decline. As Shamir explained, “a number of customers closed their facilities and limited access to their research facilities. We were unable to install or ship more than $2 million worth of flow cytometry products because no one was there to receive them.” The closure of, or limited access to, labs also meant that sales of consumables declined.
Overall, Life Science and Clinical ToolsQ1 revenue, which includes flow cytometry, was down 6% to $43.3 million. As states begin opening up, revenues in this segment are expected to improve significantly.
In the coming quarter, Shamir said, “We’re looking forward to achieving more than $100 million in a quarter for the first time in corporate history.” He said he expects Q2 revenues of about $105 million – up 26% from last year.
“We expect to be extremely profitable relative to last year’s periods,” Shamir continued. “I’m glad to play a critical role in helping (develop solutions for) the pandemic. Luminex will continue to be an important solution for years to come.”
