Luminex Misses on All Fronts - Analyst Blog

Luminex Corporation (LMNX) reported third-quarter fiscal 2010 adjusted (excluding one-time items) loss per share of 2 cents, falling behind the Zacks Consensus Estimate of earnings of 4 cents per share. The results represent an improvement compared to the year-ago adjusted loss of 4 cents per share.

The Texas-based company posted a net loss (on a reported basis) of $727,000 in the quarter, roughly 19% higher than the net loss of $609,000 a year-ago as revenue growth was offset by higher costs and tax.

Revenues jumped 16% year over year to $33.9, but missed the Zacks Consensus Estimate of $36 million. The healthy growth was supported by solid consumables, assay and royalty revenues, which soared 42%, 27% and 20% year over year, respectively, to $8.6 million, $7.9 million and $5.7 million.

However, system sales fell 12% year over year to $8.1 million, impacted by annualized decline in shipments in the quarter. Luminex shipped 231 multiplexing analyzers in the third quarter compared to 259 analyzers a year-ago.

Luminex launched its MAGPIX analytical instrument in the quarter, which is capable of executing up to 50 tests on a single sample. Moreover, the company received FDA approval for its CYP450 2D6 assay.

Gross margin was essentially stable year over year at 64.5% as revenue growth was offset by higher cost of sales (up 16%). Operating expenses rose 12.6% year over year to $21.7 million as the company shelled out more on account of R&D and selling, general and administrative expenses.

Luminex has narrowed its revenue forecast for fiscal 2010. The company now envisions revenues in the range of $138 million to $140 million (up 14%-16% year over year) compared to its previous guidance of $138 million to $148 million. The current Zacks Consensus Estimate is $142 million.

Luminex develops, manufactures and markets proprietary biological testing technologies, which has 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 moving forward. The company remains committed to expand its xMAP technology-based installed instrument base and continue to spend on assay development with some exciting assay products currently awaiting regulatory clearance in the U.S.

However, Luminex operates in the highly competitive life sciences industry, characterized by rapid and continuous technological innovation. Moreover, the company heavily depends on its partners to market its instruments and assays, a strategy that has inherent risks.