Luminex Corporation (NASDAQ:LMNX) Q3 2016 Earnings Conference Call - Final Transcript

Oct 31, 2016 • 04:30 pm ET

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Luminex Corporation (NASDAQ:LMNX) Q3 2016 Earnings Conference Call - Final Transcript

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Presentation
Executive
Homi Shamir

been informed by LabCorp that we did not win an RFP for the next iteration of this product.

Currently, we anticipate selling approximately $36 million of NuSwab-related materials to LabCorp in 2016 under a legacy customer agreement that, unlike most of our significant agreements, could be terminated on a 90-days notice.

To better manage this situation, we have negotiated an amendment supply agreement that is binding for not less than 18 months starting January 1, 2017 with a minimum purchase requirement of $63 million through June of 2018.

At this stage, similar to CF, we are uncertain as to the exact timing of the departure of this business line. It will not affect 2017 revenue growth at all. And in the second half of 2018, this product line is anticipated to be less significant to our future.

Now, let me continue with a few additional highlights from the third quarter before I turn it over to Harriss. On our Aries Sample-to-Answer platform, we submitted our Group B Strep assay to the FDA at the end of September. When cleared, this will be our third IVD cleared assay on the system. We believe the GBS assay is important, as it addressed a large and strategic market opportunity.

In addition, we have commenced a clinical trial for bobotella and are planning to submit it to the FDA by the end of 2016 or early 2017. We started a clinical study for C. diff last week and planned to start a study for group A Strep around year end or early 2017.

On Project Atlas, the internal name for our next-generation Verigene System, which addressed the syndromic testing market, we are targeting to begin clinical trials by the end of the second quarter of 2017. The first assay on Project Atlas will be iPLEX gastro panel.

And lastly, we remain in a great financial position with $84 million in cash and no debt. Now, Harriss will review the financial data. And afterwards, I will return with some closing comments.

Executive
Harriss Currie

Thanks, Homi. Let's begin the financial review with a look at revenue. Total revenue for the third quarter increased from the prior-year period by 18%, driven by healthy broad-based organic growth and a strong contribution from Nanosphere. Of our total 18% revenue growth for the quarter, 5 percentage points are attributable to organic growth and 13 percentage points can be attributed to Nanosphere.

Assay revenue grew 32% year-over-year, of which 6% was organic. The most significant portion of Nanosphere's revenue is assays, resulting in a 26 point contribution to assay growth in the quarter. For the quarter, infectious disease assay sales comprised 78% of total assay sales and grew at 53%, with genetic testing sales comprising 22% and declining by 13%. Royalty revenues were up 8% this quarter, in line with our expectations of mid-to-high single-digit growth.

Third quarter consumable revenues were up 12% compared to the prior year, attributable to healthy demand across our partner base. And the sequential decline is in line