Luminex Corporation (NASDAQ:LMNX) Q4 2014 Earnings Conference Call - Final Transcript

Feb 02, 2015 • 04:30 pm ET

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Luminex Corporation (NASDAQ:LMNX) Q4 2014 Earnings Conference Call - Final Transcript

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Presentation
Executive
Homi Shamir

Thank you. We at Luminex are very excited about the future of the Company with an increasing emphasis on the fast growing molecular diagnostics market and the launch of ARIES and NxTAG later this year, we expect to well position for accelerating growth in future year. While 2015 is expected to be year of transition as evidenced by our guidance released today, we are focused on execution and delivering our pipeline products to the market on time. We are on track and confident in our ability to maintain the current schedule. We look forward to visiting with many of you at the upcoming Leerink Conference in New York City next week.

This will end our formal comments. Operator, please open the line for questions.

Executive
Harriss Currie

Thanks, Homi. Before we get into the financial review, I'd like to address a change we've made in financial reporting effective immediately. As noted in our earnings release, we've shifted back to reporting one consolidated entity and away from segment reporting. As Homi mentioned, we've recently consolidated our commercial operations functions. And given recent changes in organizational structure to integrate our entire organization into one cohesive unit, we believe reporting as one consolidated reporting unit more accurately aligns with our operational structure and more importantly aligns with our current view of the business.

Now, let's begin the financial review with a look at revenue. Total revenue for the fourth quarter increased from the prior year by approximately 5% while full-year revenue was up 6%, both driven by solid growth in assay and royalty revenue. Notably assay performance for both the quarter and full year was characterized by balanced growth across all of our major assay product lines. We experienced continued growth of our pharmacogenomics portfolio in GTP coupled with recovery from the reimbursement challenges experienced in 2013. For the quarter, infectious disease assay sales comprised 67% of total assay sales with genetic testing sales comprising 33%. This compares to 75% and 25% respectively in the prior year fourth quarter.

Loyalty revenues were up for the quarter and full year by 10% and 7% respectively, representing total end user sales for 2014 of $456 million. Consumable revenues were down 11% for the quarter and flat for the year, primarily due to the inventory challenges experienced by our largest partner that we've discussed previously. In the aggregate, our higher margin items; consumables, royalties, and assays; comprised 77% of total 2014 revenue, up from 75% in 2013 and have played a significant role in stabilizing our gross margins in the high 60% to low 70% range. System revenues were down 31% for the quarter and 8% for the year. However if you recall in the prior year quarter, we shipped a record number of systems.

Additionally, the full-year 2013 included over $1.5 million of revenue attributable to the Australian subsidiary that was shut down. Now let's turn to the income statement. Gross margins for the quarter was an impressive 74% due to a higher concentration of our high margin items