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Luminex Beats EPS, Profits Up

Zacks Equity Research

Luminex Corporation’s (LMNX) fourth-quarter 2012 adjusted earnings of 12 cents per share (up 9% year over year) beat the Zacks Consensus Estimate of 10 cents per share. Adjusted earnings exclude one-time charges such as the acquisition-related charges of GenturaDx as well as costs associated with a study.

Profits generated were $4.3 million, up 23.5% from the prior-year quarter due to gross margin expansion.

For the full year, adjusted earnings of 39 cents a share topped the Zacks Consensus Estimate of 31 cents but were lower than the year-ago earnings of 45 cents per share. Profits (as reported) declined 14.5% year over year to $12.4 million (or 30 cents a share).


Revenues surged 16% in the reported quarter to $55.5 million, marginally surpassing the Zacks Consensus Estimate of $55 million. Revenues were driven by solid momentum in the assay and consumables businesses. For the fiscal, sales increased 10% year over year to $202.6 million, beating the Zacks Consensus Estimate of $201 million.

For the fourth quarter, Assay sales increased 45% to $23.8 million, led by strong sales in the infectious disease product line.

Revenues from the System segment plunged 31.6% year over year to $7.2 million, mainly due to lesser number of multiplexing systems placed and a transition from the LX system to the MAGPIX system, which has a lower price point. The company shipped 226 multiplexing analyzers during the quarter, resulting in total life-to-date dispatches of 9,659 analyzers, up 2.4% year over year.

On a positive note, Consumable sales increased 23% to $12.4 million. Royalty and All Other revenues grew 5.6% and 22.1% to $7.5 million and $4.7 million, respectively.


Gross margin in fourth quarter 2012 was 71% versus 67.9% in the prior-year quarter, reflecting a strong mix shift toward higher margin products. Operating expenses were up 12.3% to $32.1 million due to costs associated with the acquisition and integration of GenturaDx. However, operating margin increased to 13.2% from 8.1% in the prior-year quarter.

Selling, general and administrative expenses (as a percentage of sales) remained approximately flat year over year at 36.2%. Research and development expenses were 19.8% compared with 20.7% in the year-ago quarter.

Balance Sheet

Luminex ended fourth quarter 2012 with cash and cash equivalents (including short-term investments) of $56.4 million, down 44% year over year. Long-term debt was $1.7 million, down 34.6%.


Moving ahead, Luminex expects revenues for fiscal 2013 in a range of $220 million to $230 million, up 9%–14% year over year.  The current Zacks Consensus Estimate is pegged at $227 million.

Our View

Luminex possesses an extensive product portfolio and a healthy pipeline of novel assays, which are expected to support growth going ahead. In Jan 2013, the company received the approval from the U.S. Food and Drug Administration (:FDA) for its xTAG Gastrointestinal Pathogen Panel (:GPP). We believe that the assay will drive long-term growth for the company based on its unique features along with an estimated market opportunity of $150 million.

Moreover, Luminex is developing innovative platforms by combining resources from its latest acquisitions. The company’s initiative to establish a direct sales force for its molecular diagnostics customers will likely improve operating efficiency.

However, Luminex operates in a highly competitive life sciences industry. Sluggish growth in its core markets as well as the ongoing global austerity measures are challenges faced by the company.

The stock carries a Zacks Rank #3 (Hold). Medical instrument companies, such as Cantel Medical Corp. (CMN), Abiomed Inc. (ABMD) and Cyberonics Inc. (CYBX) with Zacks Rank #1 (Strong Buy), are expected to do well.

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