Luminex Corporation (LMNX), a developer of biological testing technologies, reported fourth quarter fiscal 2010 adjusted (excluding one-time items) earnings per share of 7 cents, ahead of the Zacks Consensus Estimate of 5 cents while trailing the year-ago earnings of 10 cents. For fiscal 2010, adjusted earnings of 12 cents also beat the Zacks Consensus Estimate of 10 cents and exceeded the year-ago earnings of 6 cents.
However, net income (as reported) for the fourth quarter and fiscal 2010 tumbled 84% and 70% year over year, respectively, to $3.2 million and $5.2 million despite an increase in sales. The year-ago quarter and fiscal year profits were boosted by tax gains of $14.7 million and $14.4 million, respectively.
Revenues for the quarter rose 8% year over year to $41.2 million, beating the Zacks Consensus Estimate of $39 million. The growth was supported by solid consumables, system and royalty revenues, partly marred by a sharp decline in assay sales. For fiscal 2010, sales soared 17% year over year to $141.6 million, also exceeding the Zacks Consensus Estimate of $139 million.
Consumable sales for the quarter zoomed 49% to $12 million riding on the growth in bulk orders. System revenues spiked 11% to a record $10.3 million, buoyed by higher shipments of multiplexing analyzers. Luminex shipped 286 analyzers in the quarter compared to 253 a year-ago. Royalty revenues soared 26% to roughly $6 million. However, assay sales slid 28% to $9.2 million as healthy H1N1-related demand boosted sales of the company’s tests a year-ago.
Gross margin increased to 69.4% from 67.2% a year-ago owing to top line growth. Operating expenses rose 15.4% year over year to $23.5 million as the company spent more on account of R&D and selling, general and administrative expenses. Luminex ended fiscal 2010 with cash and cash equivalents of $89.5 million, up 1.5% year over year.
Moving forward, Luminex expects revenues for fiscal 2011 in the range of $163 million to $170 million, representing a 15-20% year over year increase. The current Zacks Consensus Estimate is $169 million.
Texas-based Luminex develops, manufactures and markets proprietary biological testing technologies, which have applications across the life sciences industry. The company’s proprietary open-architecture xMAP technology enables fast, cost-effective and accurate conduct and analysis of biological tests (bioassays).
Luminex has an extensive product portfolio and a healthy pipeline which are expected to support growth going forward. The company remains committed to expanding its xMAP technology-based installed instrument base and continuing to spend on assay development.
Luminex, in December 2010, renewed its long-standing strategic collaboration with California-based leading transplant diagnostic products maker One Lambda Inc. The companies will continue developing technologies for human leukocyte antigen (“HLA”) testing and antibody screening for the organ transplantation market.
However, Luminex operates in the highly competitive life sciences industry, characterized by rapid and continuous technological innovation. The company competes with Affymetrix (AFFX), Life Technologies (LIFE) and Sequenom (SQNM) and depends significantly on its partners to market its instruments and assays.
Moreover, Luminex is susceptible to regulatory delays. Also, demand for research and diagnostics applications is expected to remain soft over the next few quarters given the still challenging macroeconomic backdrop. We currently have an Underperform rating on Luminex. The stock currently retains a Zacks #5 Rank, which translates into a short-term “Strong Sell” recommendation.
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